Hedging and Shorting Masterclass
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Risk Management
Learn to minimize potential losses and protect your investments.
Profit Maximization
Discover how to profit from market downturns through short selling.
Strategic Investing
Gain the knowledge to navigate market fluctuations effectively.
Hedging
Hedging is used to reduce potential losses from unfavorable price changes. It involves taking an offsetting position in a related asset. For example, a stock investor might buy put options to protect against a price drop.
The goal of hedging is to limit losses rather than maximize profits. Common tools for hedging include options, futures, and swaps. Itβs widely used to stabilize portfolios and manage risk.
Shorting
Shorting, or short selling, is a strategy to profit from a price decline. It involves borrowing shares, selling them, and repurchasing them later at a lower price.
For instance, a trader borrows a stock at $100, sells it, and buys it back at $80, making a $20 profit. Shorting is speculative and carries higher risks, as losses can be unlimited if the stock price rises significantly.
