The world economy 70-80-ies of the last century, an unprecedented instability was commonplace.Price spikes were exposed virtually all products.Any entrepreneurial activity is inextricably linked with certain was a risk.In Spanish, the word "risko" called rock with steep slope.Burns in my dictionary at risk appropriated dual property.Firstly, it is expected danger in contrast, risk is defined as the action in the hope of a happy outcome at random.
then that there were the beginnings of strategies for risk management.
to mitigate and eliminate the financial risk was invented many ways and tools, collectively known as hedging.Hedging - insurance of risks in the financial sphere, which is expressed occupation opposite positions on the asset market.Translated "hedge" means "fence", "protection".Forex Hedging is used in a variety of situations.Earnings on currency fluctuations in quotations and value of booms involves deep study of the situation on the market, as well as the development of strategies for the prevention of risks.
considering the insurance of financial transactions in terms of technology, we can clearly distinguish two types of hedging.This is a short and a long hedge.The first involves the sale of futures contracts, the second purchase of futures contracts.Separately considered hedging options, option sellers are widely used in the practice of delta hedging.
When carrying out any hedging transactions is necessary to perform two steps.First - it is opening a position in a futures contract, the second - its closing of the reverse transaction.Classic embodiment, on which there is a hedge - when contracts are both positions with respect to one and the same item for the same amount at the same supply lines (within one month).
considering selling hedge may be noted that this type of insurance is to use the futures market short position in the presence of a long position in the cash market.In this embodiment, it takes the protection price of the goods on which it planned to sell.This method is widely used by sellers of real goods who wish to protect themselves from falling prices.Hedges of this type are used to protect stocks of goods or financial instruments that are not covered by the forward-type transactions.Short Hedge has found application in cases of necessity to protect the price has not yet made production or purchase agreements on forward agreements.
Hedging purchase buys a futures contract the owner of the short position in the market.As a result, fixed purchase price of the goods.Hedging is protected against the risks that may arise in the course of forward sales at fixed prices, surge in commodity prices, is widely used in manufacturing, which has a stable price.Intermediary firms that have entered into the transaction, calculated on the purchase of goods in the future, company-processors use this kind of financial insurance.
