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  • Hedging Funds: The Way You Can Make Double

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    Farishtay Khan
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    Hedging funds use various tools like derivatives, futures contracts, and hedging models to minimize investment risks and sustain returns. The document discusses how investment companies employ strategies like short and long positioning on futures contracts to hedge against price, currency, and other economic risks. It also outlines some common hedging tools used, such as forward contracts, future contracts, options, and warrants, which are derived from underlying asset values.

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    Hedging Funds

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    Hedging funds use various tools like derivatives, futures contracts, and hedging models to minimize investment risks and sustain returns. The document discusses how investment companies employ strategies like short and long positioning on futures contracts to hedge against price, currency, and other economic risks. It also outlines some common hedging tools used, such as forward contracts, future contracts, options, and warrants, which are derived from underlying asset values.

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    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
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    10 views9 pages

    Hedging Funds: The Way You Can Make Double

    Uploaded by

    Farishtay Khan
    Hedging funds use various tools like derivatives, futures contracts, and hedging models to minimize investment risks and sustain returns. The document discusses how investment companies employ strategies like short and long positioning on futures contracts to hedge against price, currency, and other economic risks. It also outlines some common hedging tools used, such as forward contracts, future contracts, options, and warrants, which are derived from underlying asset values.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
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    of 9

    Hedging Funds

    THE WAY YOU CAN MAKE DOUBLE


    Introduction

    Minimize
    Shifting
    Transfer
    Reduce
    Manage
    Control
    Eliminate……. The Risk
    Objective
    How the investment companies use different tools to
    minimize there long and short term investment risk
    and sustain or increase the returns?
    Risk can be….

    Price Risk
    Currency Risk
    Other Economic Indicators
    Scope

    The hedging strategy is used by many of the


    investment companies like banks and other stock
    investments for investment purpose.
    Derivatives (Act 1956)
    The hybrid contract of predetermined fixed duration
    Its value is entirely derived from the value of the
    underlying asset
    These can be: securities, commodities, currency, live
    stock etc
    Derivative mean and the hedging tools are:

    Forward Contracts
    Future Contracts
    Options
    Warrants
    Future Contracts

    Selling or buying a contract on some fix rate and fix


    time in future
    Types of Future Contracts
    1- Short Future Positioning (cash positioning)
    2- Long Future Positioning (asset positioning)
    Hedge Model

    QT(Ft,T-PT)
    PT= Spot Price
    Ft,T= Future Price at time t
    Barriers

    Fluctuation in prices during contract

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