Hedged portfolio

Definition:

A portfolio consisting of a long position in the stock and a long position in the put option on the stock, so as to be riskless and produce a return that equals the risk-free interest rate.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Forward delivery

A transaction in which the settlement will occur on a specified date in the future at a price agreed upon on the trade date.

Subscribe to the Term of the Day via email Get the Term of the Day in your inbox!


Create your free portfolio