Hedging and Forwards
Long and short hedges, basis risk, cross-hedging, cost of carry, and how futures are used on indices, FX and rates.
Beginner
6 lessons
about 1h of reading
Hull Ch. 3-4
Short hedgeLong hedgeBasis riskCost of carry
What this track covers
- 01
Why hedge?
Volatility you can't price away, and the floors you can.
9 min
- 02
Long & short hedges
Producer, consumer, treasurer, three textbook positions.
11 min
- 03
Basis risk
Why the hedge never matches perfectly.
10 min
- 04
Cross-hedging
When the perfect contract doesn't exist.
11 min
- 05
Cost of carry
Storage, dividends, convenience yield, decomposed.
11 min
- 06
Index, FX and rate futures
How treasurers actually use futures.
12 min
- Quiz
Quiz · Hedging check
10 questions on hedges, basis, cross-hedging, carry and beta-hedging.
8 min
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