Legacy hedge


A position on a asset that a company holds to preserve current price that is favorable to them. For instance, an airline company that thinks prices of crude would shoot up within a year has the option to buy reserves of fuel at the current price. Now if the price of crude doubled, the airline that hedged on oil priced would have a significant advantage over its rival in terms of ticket prices since the fuel they use was purchased at a much lower price from a year ago.

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