Hedging
In the credit market, the taking of a protection buyer position by selling the credit risk to a protection seller (fixed rate payer) and, unless otherwise stated, by means of a credit derivative (more rarely related to sureties and guarantees). – The transfer of any risk of loss arising from an unfavorable price movement through the purchase or sale of contracts in the futures market. – If a good (financial product, commodity) is to be purchased in the future, a forward contract is bought today (long hedging). If the commodity is to be sold in the future, a forward contract is sold today (short hedging). – In the case of a financial product, the guarantee that the security will generally be redeemed at the issue price, as in the case of a guarantee product or guarantee certificate. – See outage, aval, call, hedge, replacement hedge, futures markets, credit derivative, credit event, long hedge, model risk, monetization, put, risk, commodity price risk, commodity futures contract, option, rollover credit, short hedge, speculation, commodity futures contract, worst case hedging, interest rate option, interest rate swap.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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