The concept of hedging is one that an options trader must understand thoroughly. On its surface, it’s a very simple concept: A 2nd trade is made with the sole purpose of offsetting all or part of the risk associated with owning the first position.

Thar definition seems to be well understood. However, some traders try to use hedges and hedged positions for other purposes. That’s when trouble may begin.

The following 17-minute video on hedging is being added to the Introduction to Options Course and is introduced here as its own blog post.


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