An investment strategy to reduce risk of adverse price movements. In India, traders commonly hedge equity positions using Nifty or stock futures and options.
Hedge
Related terms
The weighted average cost at which you purchased shares of a stock, calculated by dividing total cost by total quantity. Used for P&L calculations in UseMoney.
A measure of a stock's volatility relative to the overall market. Beta of 1 means the stock moves with the market; above 1 means more volatile; below 1 means less volatile.
Compound Annual Growth Rate. The annualized rate of return that smooths out volatility, showing how an investment would have grown if it grew at a steady rate.
A derivative contract that gives the buyer the right (but not obligation) to buy an underlying asset at a specified strike price before or on the expiry date.
A dematerialized account that holds shares and securities in electronic form, eliminating the need for physical certificates. Required to trade on Indian stock exchanges.
Futures & Options. Derivative instruments traded on NSE/BSE that derive their value from underlying assets like stocks or indices. Used for hedging and speculation.