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NE SD | A simple answer is-- A person wants to sell cash grain at a certain time but does not like the basis so he enters into a short hedge in the futures market hoping the basis will improve. When he actually sells the physical grain at a hopefully better basis he lifts or buys back the futures contract and hopfully did not lose all he gained in basis improvement with interest charges on margin call money. Been there done that.
Jerry | |
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Define what Hedge means???
