Hedging with Derivatives

Start with the mind maps

The page has two maps titled Hedging. One introduces hedging as a way to manage risk and covers contractual methods, including forward, futures and options contracts. The other looks at hedging through derivatives and lists options, swaps, futures and forward contracts. Together, they offer a starting point for the terms used across the collection.

Next, look at Risk Management Topics. It brings forwards and futures together with option strategies, combined option positions and interest rate options. Use it to see which parts of risk management you want to study more closely.

Follow the futures resources

Hedging Using Futures asks why people hedge and introduces long and short hedges. Read through its questions and branches before moving to a quiz. Another map on futures hedging strategies covers margin deposits, including initial margin.

The Hedging with Futures quiz includes a question about calculating a hedge ratio using spot and futures data. Another quiz asks about futures market functions, risk transfer, and offsetting contracts. Work through the questions, then return to the maps to review the terms you found difficult.

Explore the rest of the collection

The flashcard decks include Interest rate hedging and Derivatives and risk management. There are also notes, including Futures and options illustration, which works through an interest calculation. These resources give you other ways to approach the material after using the maps and quizzes.

Hedging with Derivatives is one section of the Derivatives unit in Finance and banking. Use this page to focus on hedging while keeping the wider unit in view. Choose a map and follow it with a quiz when you are ready.