With the rising initiatives there is a great inflow of foreign exchange in Indian markets in the form of receivables or payables. Some of these payables are in the form of ECB, INR denominated working capital loans, Issuance of Certificate of Deposits (CD), Commercial papers and other money market instruments to fund working capital needs. In the last few years we have seen huge flow of USD, GBP, and EUR, Commodities currencies PDF Establishing risk and reward within FX hedging strategies Australian Dollar, New Zealand A risk management strategy used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities.
In effect, hedging is a transfer of risk without buying insurance policies.Hedging employs various techniques but, basically, involves taking equal and opposite positions in two different markets (such as cash and futures markets). It always made Rex a little nervous when his broker Norman was hedging his investments, but Norman assured him it was a common risk management strategy and just involved a little off-setting between accounts.
One of the greatest difficulties faced by small businesses is having access to an adequate amount of cash. Individuals trade options for a variety of reasons. Some people trade them in order to speculate on the expectation of a given price moment, while others use options to hedge an existing position. Others use more advanced strategies in hopes of generating extra income on a regular basis.
All of these are valid objectives and can be successful if done correctly. Still, there is a whole range of unique strategies along the option trading strategy spectrum that offer outstanding reward-to-risk potential for those willing to consider the possibilities.