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Anticipatory Hedge


Hedging a transaction that is expected to be made on a future date using futures contracts. In other words, it is an investment made or a position taken to reduce or mitigate the risks associated with another investment or position expected to be made or taken in the future. When a long position is taken in futures contracts in order to lock in a price at the futures price quoted today, the anticipatory hedge is said to be long.

Similarly, by taking a short position in futures in order to lock in a price at the futures spot price today, the hedge is labeled “short”.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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