risk management and hedging
Educational articles in this subcategory.
Vega Hedging for Volatility Surfaces
# Vega Hedging for Volatility Surfaces Vega hedging manages exposure to implied volatility changes across the entire volatility surface—not just ...
Using Options to Hedge Equity Portfolios
# Using Options to Hedge Equity Portfolios Options provide flexible tools for protecting equity portfolios against market declines. Put options e...
Using Futures to Hedge Commodity Exposure
# Using Futures to Hedge Commodity Exposure Futures contracts enable producers and consumers to lock in commodity prices, converting price uncert...
Tail-Risk Hedging Strategies
# Tail-Risk Hedging Strategies Tail-risk hedging protects portfolios against extreme market events—the rare but devastating drawdowns that exceed...
Stress Testing and Scenario Analysis
# Stress Testing and Scenario Analysis Stress testing evaluates portfolio performance under extreme but plausible market conditions, complementin...
Protecting Concentrated Stock Positions
# Protecting Concentrated Stock Positions Concentrated stock positions—typically from executive compensation, company founders, or inheritance—cr...
Overlay Strategies for Institutional Portfolios
# Overlay Strategies for Institutional Portfolios Overlay strategies use derivatives layered on top of existing portfolios to adjust exposures wi...
Measuring and Reporting Value at Risk
# Measuring and Reporting Value at Risk Value at Risk (VaR) quantifies the maximum expected loss over a specified time period at a given confiden...
Liquidity Considerations in Hedging Programs
# Liquidity Considerations in Hedging Programs Hedging programs require careful liquidity planning to meet margin calls, roll positions, and adju...
Interest Rate Risk Hedging with Swaps
# Interest Rate Risk Hedging with Swaps Interest rate swaps are the primary tool for managing interest rate risk in corporate treasuries and inve...
Hedge Effectiveness Testing for Accounting
# Hedge Effectiveness Testing for Accounting Hedge accounting requires demonstrating that derivatives effectively offset the risk being hedged. E...
Governance for Derivative Use Policies
# Governance for Derivative Use Policies Governance frameworks for derivatives define who can authorize trades, what instruments are permitted, h...
Glossary: Risk Management Terms
# Glossary: Risk Management Terms This glossary provides definitions for key terms used in derivatives risk management and hedging. Terms are org...
Gamma Scalping and Volatility Trading
# Gamma Scalping and Volatility Trading Gamma scalping is a trading strategy that profits from realized volatility by systematically rebalancing ...
Dynamic vs. Static Hedging Approaches
# Dynamic vs. Static Hedging Approaches Hedging strategies range from static approaches that establish positions and hold to maturity, to dynamic...
Delta Hedging Basics
# Delta Hedging Basics Delta hedging neutralizes the directional exposure of an options position by taking an offsetting position in the underlyi...
Currency Hedging for International Holdings
# Currency Hedging for International Holdings International investments carry currency risk—the value of foreign assets fluctuates with exchange ...
Counterparty Risk Management and CSA Terms
# Counterparty Risk Management and CSA Terms Counterparty risk in OTC derivatives arises when the other party may fail to meet its obligations. C...
Case Studies of Failed Hedges
# Case Studies of Failed Hedges Hedge failures have caused billions in losses and contributed to corporate bankruptcies. These failures typically...
Automation and Monitoring of Hedge Ratios
# Automation and Monitoring of Hedge Ratios Automated hedge monitoring systems track exposure-to-hedge relationships in real-time, alerting when ...