Investing in financial products involves risk to your capital.

Close Navigation
Learn more about IBKR accounts

Basic Hedging

Trading Course
Level Beginner

Explore mitigating risk using assets whose movements are often equal yet opposite but enable the investor to hedge an instrument or portfolio. Critical concepts covered include derivative instruments such as futures and options and how they are used to offset risks associated with an underlying instrument.

This lesson explains the concept of mitigating risk using assets whose movements are often equal yet opposite but enable the investor to hedge an instrument or portfolio. Critical concepts covered include derivative instruments such as futures and options and how they are used to offset risks associated with an underlying instrument.

An investor faced with a profitable long position in a stock might seek out options strategies designed to both create a stream of income, while simultaneously protecting against adverse movements in the price of the underlying stock. This lesson introduces basic options principles to discuss the covered call position and a protective put position, which together with the initial long stock position create an options collar.

This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.