How Does a “Strip Hedge” Differ from a “Stack Hedge”?

Both are strategies for hedging a series of future exposures. A strip hedge involves using a sequence of futures contracts with different, consecutive expiration dates to match the timing of a series of future exposures.

A stack hedge involves using a large number of futures contracts all expiring in the same near-term month to hedge a series of exposures over multiple future periods. Strip hedges are generally preferred for lower basis risk.