| 释义 |
Over-Hedging Over-HedgingThe practice of taking an offsetting position on an investment to reduce its risk where the offsetting position is greater than the original position. For example, one may buy 100 shares of AT&T and then buy a put option, giving one the right, but not the obligation, to sell 125 shares of AT&T. While this completely eliminates the risk associated with the first 100 shares declining in price, over-hedging creates a new risk for the extra 25 shares in the put contract. |