What is hedging in the stock market?
Trading basics
Hedging means taking an offsetting position (often through derivatives) to protect an existing investment from potential losses due to adverse price moves.
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An investor holding a stock might buy a put option as insurance — if the stock falls, gains on the put help offset the loss. Hedging reduces risk but usually comes at a cost (like the option premium), a trade-off between protection and potential upside.
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