What is it in finance?
In Finance is a long Hedge Investment Technology, which allows the investor to protect himself from losses by locking an agreed price for a commodity purchased in the future, known as futures. Futures contract is an organization for the investor to buy a commodity at a specified price for a specified date. When the investor buys or sells an investment to protect himself from price changes, he ensures. The long hedge is, unlike the short collateral, in which the investor sells borrowed securities or futures in commodities that he does not have yet.
When the investor takes a long position, it means that she has bought safety in the hope of profiting from rising prices. Basically, a long investment is a bet that the price of the investment will rise to the end of the contract called Delivery. If the price rises, the investor benefits from the price difference. Declining prices mean that the investor loses a more paid price for a lower weighted commodity or shares that she could buy at a lower price. The investor performs a longInvesting Investment Long investment to balance potential losses in other investments that may include securities or company owned by an investor.
Often, businesses are often used by a long hedge who wants to lock the costs of fulfilling the contract to be met in the future. If in March the shop owner gets a contract for Apple Pies with a delivery date in November, the shop owner can buy futures in apples to protect against rising apples when the time comes to the cakes. By now blocking the price for apples, the store owner ensures that changes in apples will not affect its profit on Apple Pies, but if the price of Apple drops lower than the price owner of the store agreed to buy apples, loses on discount. Although the price of a long locking investment does not work for the benefit of the Apple Pie store, it still benefits fromE stability of the permanent price of apples, which can base estimates of business costs.
A short hedge is used to settle planned losses in long -term investment contracts. Properly designed short hedge can zero losses arising from long -term investments. When the investor shorts on the stock market, the investor borrows shares from the broker to sell with the agreement that the investor by buying a shares on a predetermined date. Investors who work with short investments bet that the price of a short -circuit commodity or shares will drop. If the price of security rises, the investor will lose money, because then he has to pay a higher price for securities sold earlier at a lower price.