Tailing the Hedge
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1. Context
In this short video from the FRM Part 1 curriculum, we explore this concept of “Tailing the Hedge”. It is defined as the reduction in the quantity of futures based hedge required, if you were to take into account the daily settlement feature. The details of the reading in which this topic appears are given below:
| Area | Financial Markets and Products |
| Reading | Hedging Using Futures |
| Reference | John C. Hull, Chapter 1. Introduction In Options, Futures, and Other Derivatives, 10th Edition, (New York: Pearson, 2017). |