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this is frm part one book three financial markets and products chapter six hedging strategies using futures contracts and of all of the derivatives Securities topics that I love to teach showing students how to hedge sometimes its a perfect edge sometimes its an imperfect hedge these topics are among my favorites so lets look at the learning objectives quickly here were gonna take a look at the difference between short and long hedges were gonna argue for and against hedging talk about basis risk of course we always have to talk about basis risk and then were going to define cross hedging and the need for some kind of a hedge ratio and as in lots of instances in finance were gonna try to find the hedge ratio that has the minimum variance boy coming up with some solution where that volatility that standard deviation of the variance is pushed in a vise so it gets to be this smallest possible number so were going to call that the minimum variance hedge ratio will talk about the o
