Series 66: 4.5.6.2.2 Hedging Strategies

4.5.6.2.2  Hedging Strategies

Unlike speculative strategies, hedging strategies are made not to increase income but to reduce risk. More specifically, a hedge is a transaction made to reduce the risk of an already existing investment position by taking an offsetting position. Of course, a hedge cannot limit the risk of loss without compromising the likelihood of gain.