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How Can Options or Futures Be Used to Hedge a Security Token Position?

Options and futures contracts can be used to hedge a security token position by taking an offsetting position in a related derivative. For example, an investor holding a security token can buy a put option or sell a futures contract on the token (if available) or a highly correlated asset.

This limits potential downside risk, as losses in the token position would be offset by gains in the derivative position.

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