What Is the Difference between a "Long Hedge" and a "Short Hedge"? ▴ Learn

What Is the Difference between a “Long Hedge” and a “Short Hedge”?

A long hedge is used when a party anticipates buying an asset in the future and wants to lock in the purchase price today to protect against a price increase. They achieve this by buying a futures contract (going long).

A short hedge is used when a party already owns an asset or anticipates selling one and wants to lock in the sale price to protect against a price decrease. They achieve this by selling a futures contract (going short).

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