All Questions
19 questions
0
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35
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Currency hedging for intra-month expense FX rate risk as a US expat = only net drag?
I've been curious for a long time now about a specific hypothetical scenario for my personal situation. I'm a US citizen living and working long-term in Switzerland, and I've kept most of my day-to-...
0
votes
1
answer
441
views
How to properly hedge indices futures NQ by selling leveraged index options TQQQ or SQQQ?
Is there a formal futures NQ vs TQQQ options contracts hedging ratio calculation/strategy to tap on the fast decaying value of weekly expiry TQQQ options thereby creating an asymmetric risk-reward ...
- 29
0
votes
1
answer
109
views
Forward vs Future rates
Looking at the market data for USD/CHF on investing.com and can't get my head around the difference between the forward and futures rates for this pair.
USD/CHF spot rate is 0.9898
MAR23 Futures ...
-1
votes
2
answers
115
views
How to get fiat liquidity on BTC assets
I am bullish on BTC and at the same time I need some fiat liquidity right now. Is there some combination of financial products I can use? As an example:
I have 10 BTC (assume current FX $10,000)
I ...
- 1
20
votes
7
answers
5k
views
Can I hedge my household expenses using the financial markets?
Apparently farmers can hedge against high raw material prices and low crop prices by using financial instruments such as forwards and futures. Can I use financial instruments to similarly hedge my ...
- 17.2k
0
votes
1
answer
102
views
What is the meaning of asset underlying the futures contract?
I am reading a book of J.C Hull on Future and option where he explained the basis risk which is S2 + F1 - F2 or F1 + b2 I got this concept but reading further he expand above expression as F1 + (S*2 - ...
- 101
0
votes
2
answers
294
views
How does trafigura hedges the price risk?
I wanted to know how does company like trafigura hedges against price risk?
Example if trafigura agrees to sell say a barrell of WTI crude oil @ $56 3 months hence. How would they hedge it?
Would ...
- 183
1
vote
2
answers
212
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Hedge against crypto currency / exchange risk
I have securities that have crypto-currencies (say, XBT/BTC) as a base currency and I want to avoid the tremendous volatility of this market.
There are options for margin trading of sorts (shorts, ...
- 111
0
votes
2
answers
142
views
Hedging against currency risk
Is there a hedging method against currency risk without lowering returns ?
Classic hedging methods like forwards, futures options, all have a cost and don’t remove risk “for free”.
- 31
-1
votes
1
answer
89
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Forex instead of futures as a hedge
Why don’t companies use forex trading as a hedge for their foreign exchange risk instead of futures ? Forex is much more liquid than futures, easier to have access to all your positions anytime, ...
- 31
2
votes
1
answer
253
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Confused about eurodollar futures
A eurodollar futures contract is a cash-settled futures contract based on a Eurodollar Time Deposit and having a principal value of USD $1,000,000 with a 3-month maturity.
Suppose that a a bank ...
- 23
1
vote
2
answers
2k
views
How does a portfolio of long stocks and short futures generate profits
When a portfolio manager goes long a basket of stocks (that make up an index) and hedges his market risk by shorting the corresponding index future, what is his source of potential profit?
He cannot ...
- 16.1k
1
vote
2
answers
730
views
Should I use futures or options to hedge my long SPY position?
If I am long 100 shares of SPY, what are some questions that I can ask myself to decide:
Whether I should hedge by selling futures, or by buying put options?
What are some pros and cons of each?
- 16.1k
1
vote
1
answer
107
views
What is the source of income for a hedged portfolio
Let us say I am long SPY and I sell the corresponding number of e mini s&p futures.
Now, how will this portfolio profit?
Will this grow at the risk free rate? The profit from the stock position ...
- 16.1k
2
votes
1
answer
536
views
How to hedge volatility decreases
My particular options positions are typically a long delta, and long vega. Decreases in implied volatility, or specifically the VIX, can drastically alter the profitability of my position.
Is there a ...
- 20.2k
-5
votes
1
answer
318
views
A goldsmith's hedging strategy, simplified
A goldsmith has bought 100oz physical gold for his trade and paid $1300/oz. He is going to be ready to sell his jewels in 3 months from purchase.
In order to hedge against falling prices of gold, he ...
- 33
18
votes
2
answers
7k
views
What is the difference between hedging and diversification? How does each reduce risk?
Hedging and diversification are both used for reducing financial risks, but what are the exact differences between these two?
- 299
1
vote
0
answers
114
views
Forward Contract Extension
I was reading this article
Below is a small snippet from the article. I'm wondering how Barrick gold could extend the hedge at its own option. How would this be executed and how do they have this ...
- 111
2
votes
2
answers
265
views
Hedging against rising oil and gas prices for private households?
Inspired by this article Hedging Against Rising Heating Oil Prices using Heating Oil Futures, I wonder whether hedging against rising oil and gas prices makes sense for private households, too? If so, ...
- 121