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Long Hedge

What does Long Hedge mean?

A hedging strategy that involves taking up a long futures position. A producer uses this strategy to hedge against possible increases in prices of the actuals, its raw material, underlying the futures contracts. It is also known as input hedge or buy hedge.

Futures Knowledge Explains Long Hedge

For example, an oil refinery mat buy the long hedge to lock in the price of crude oil and protect against future price volatility. Investors also take a long position in futures contracts in commodities whose prices are like to increase and earn profit.

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