Hedge

Hedge is a position intended to reduce exposure to a specified risk. A hedge can be incomplete and can introduce costs or other risks.

Why this matters to income investors

Protection against one risk has costs and may create different exposures that affect earnings.

How to use hedge in your research

Read the financing or hedge terms and the amount of liquid collateral available. A market move can trigger a cash demand even before the underlying investment is sold.

This material is general education and information, not individualized investment, tax, or legal advice.