THE HEDGE TO END ALL HEDGES

>at work
>tell customer "10 euros or 12 dollars"
>she asks which dollars
>"we're from canada you know, you need to be more specific"
>try not to burst into laughter while taking the dumb cunts money

actually the point of a hedge is to "hedge" against losses in your primary market.

So, moving sideways during a crash or even dipping, but dipping far less than the primary market, is considered a successful hedge.

ex - If I have $100,000 in gas and oil stocks because I think the price of oil will go up, I also realize that there is a chance that oil will go down. I might hedge against that by buying some distant short calls on the oil commodity markets, maybe like $2,500 worth.

So, if oil goes down a little, I am still probably covered with dividends. If it goes up, then I eventually lose my short calls, but I am gaining equity and dividends. If it drops significantly, I may lose 40% of my $100,000 investment, but since $2500 in short options, buys you 100 shares per contract, we will say that each contract cost $2.50 so we have options on 100,000 shares. If we make $0.40 on each share, we make $40,000, which is what we lost on the original investment.

That is a hedge.

I dont think it is a bad hold but i dont see it mooning anytime soon. It is more a transaction unit for banks and I think they value the stability over all.
Looking at it in satoshi doens't make any sense to me. Right now the agreed penny price seem to hover around the 3-4 mark and i dont think it will go any higher than 5 in the next 3-5 months.

Why not simply invest less? Whats the advantage of hedging against a loss instead of simply investing less?
Or in that case you are in danger of losing value because of currency deflation and fluctuation?

I mean when I think about it it sounds to me like hedging is not really to reduce risk specifically as that can be achieved by simply not investing in x risky thing or investing less etc..
I think hedging has some other use besides that that must differ somehow or has some other purpose than if you simply invest in less risky stuff or invest less.

You are wrong. By your definition even the dollar would be a hedge against btc since it only goes down 1-3% per year.

A hedge is there to offset losses from your main position.

Your example makes perfect sence though.

>implying the tax rate is worth free healthcare

You are right, its retarded and falacious.
Imagine you are betting on red and black at the same time. Who's dumb enough to do that?

I sold all of my ETH on Monday and bought xrp and haven't killed myself yet so yes, it was safe for me.

your comment:
>A hedge is there to offset losses from your main position.

is the same as :
>actually the point of a hedge is to "hedge" against losses in your primary market.

as for The point - and am not saying I 100% agree with it - is to take on a little, hihgly leveraged risk that is in opposition to your primary investment.

You still believe oil is going up 20% in the next year, plus you are receiving 7% annual dividends. If you are right, you lose your $2500 hedge position, but have $27,000 in gains in your primary investment.

So you net $24,500 or 24.5%

If you just invested $50,000 to start with, and there was a 40% drop, you would still lose 20% of your total investment pot ($50,000 investment and $50,000 cash = $100,000)

And if you did see the gains in earlier paragraph, you would make $13,500 or 13.5% on your total investment pool.

The real risk of a hedge is if thinks stay stable or lose a small amount of value. The you lose your leveraged hedge ($2500) plus the 5% loss in equity ($5,000).

Again, i am not proposing anyone shoudl do this, just explaining the hedge.