How is short selling different from buying the put?

Two strategies stand out to profit in a bear market: short selling stocks and buying put options. Both are ways to profit when the market is weak, but that's where many similarities end. Ultimately these are very different positions to take in the market, with very different risk profiles. For those considering getting into bear-side … Continue reading How is short selling different from buying the put?

How do companies use derivatives to hedge their bets?

Just like individuals can use derivatives to hedge the bets, companies do the same thing. Their approach is a little more sophisticated, but a lot of the principles remain the same. Here's how. Industry and System Risk In the context of hedging corporate accounts, one of the most important factors is industry risk. Industry risk, … Continue reading How do companies use derivatives to hedge their bets?