Friday 24 April 2015

Over Hedging vs under Hedging

 Over hedging vs under Hedging

Future contracts are subject to over hedging and under hedging because future contract are offered at standard terms which may not match your exact requirement and therefore will result in over and under hedging.

Over hedging in future Contract

Over Hedging – Hedging more than your requirement.

Under Hedging - Hedge less than your requirement.