Skip to content
Solved
SearchBrowse
Sign in

Contents

Official guidance
VAT Finance Manual

VATFIN6000 · Financial derivatives

  • VATFIN6100 · Purpose of VATFIN6000
  • VATFIN6150 · Place of supply
  • VATFIN6200 · Futures contracts
  • VATFIN6300 · Options
  • VATFIN6400 · Hedging
  • VATFIN6500 · Other types of contracts
  • VATFIN6600 · Trading on the London International Financial Future and Option Exchange ("LIFFE")
  1. Financial derivatives: contents
  2. Financial derivatives: hedging

VATFIN6400 | Financial derivatives: hedging

From HM Revenue & Customs · VAT Finance Manual

Hedging is a method of protecting against a financial risk arising from price fluctuations. For example, when a trader has bought but not sold contracts for commodities or financial instruments he holds an open position. The risk can be hedged by buying an equal and opposite futures contract (i.e. to sell), which offers some (but not complete) protection against the vulnerability of an open position.

PreviousNext
PrivacyTerms