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A hedgelet is a a financial instrument whose value is based on another security that allows investors to speculate on economic events. Such events are: housing prices, commodity prices, interest rates, currencies, and economic indicators.

Two kinds of hedgelets: binary options and capped futures.

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fxpie
fxpie
1 year ago

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Hedgelets" come in two varieties: binary options and capped futures.[4] Binary options are bets on outcomes, "yes/no" contracts, that pay out a small dollar amount (e.g. $100) if final price of an instrument is above the strike price and nothing if below. For instance, HedgeStreet launched Germany 30 Binary Options in 2008. The Germany 30 contract is based on the DAX Equity Index Futures; if the estimate exceeds the strike price, the binary options pay out. A binary option is a contract with an all-or-nothing payout. BUY if you believe the market price of the underlying asset will settle above a specific strike at expiration. SELL if you think it won’t. The price of a binary contract is determined by the marketplace and represents the probability at the time of the trade that the underlying will exceed the strike price at expiration. If your insight proves correct, at expiration you get $100 (i.e., the full contract value). So, your profit equals $100 minus your initial investment plus fees. If you were incorrect, you lose only your initial investment plus fees.

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Harold
Harold
1 year ago

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A simplified derivative instrument that allows investors to hedge or speculate on economic events such as housing prices, commodity prices, interest rates, currencies and economic indicators.

The price for a hedgelet contract is based on the prevailing market price determined by participants in the market. Every contract has the same defined payout scheme: $10 for a correct contract and $0 for an incorrect one. Each hedgelet contract is set so that investors must make a decision on whether an economic event will occur or not occur

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Harold
Harold
1 year ago

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use the forward market to cover a transaction or open position and thereby reduce exchange risk. The term applies most commonly to trade.

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hanan
hanan
1 year ago

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A thicket of bushes, usually thorn bushes; especially, such a thicket planted as a fence between any two portions of land; and also any sort of shrubbery, as evergreens, planted in a line or as a fence; particularly, such a thicket planted round a field to fence it,

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hanan
hanan
1 year ago

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is a mitigating device used to lessen the impact of an utterance. Typically, they are adjectives or adverbs, but can also consist of clauses. It could be regarded as a form of euphemism.

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hanan
hanan
1 year ago

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a hedge is a position established in one market in an attempt to offset exposure to price fluctuations in some opposite position in another market with the goal of minimizing one's exposure to unwanted risk

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hanan
hanan
1 year ago

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Hedgelet

* A simplified derivative instrument that allows investors to hedge or speculate on economic events such as housing prices, commodity prices, interest rates, currencies and economic indicators.

The price for a hedgelet contract is based on the prevailing market price determined by participants in the market. Every contract has the same defined payout scheme: $10 for a correct contract and $0 for an incorrect one. Each hedgelet contract is set so that investors must make a decision on whether an economic event will occur or not occur.

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thegreeks
thegreeks
1 year ago

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HedgeStreet defines all of the Hedgelets traded on the exchange, but it does not take a position in any Hedgelet. Market makers set a bid/offer, and members can buy and sell Hedgelets on the open Exchange until the Hedgelets’ specified expiration dates. Prices are determined by the market’s view of the likelihood that a Hedgelet’s underlying event will occur.

Soon after a Hedgelet expires, the underlying event’s outcome is determined, and whichever Hedgelet (YES or NO) is “in-the-money” is redeemed for $10, while the other “out-of-the-money” Hedgelet expires worthless.

For example, assume that HedgeStreet defines a Hedgelet based on whether the price of regular gasoline at the pump, as reported by the Energy Information Administration, is greater than $2.00 on Dec. 31, 2004. Also assume that during the Hedgelet’s life cycle, 100 of the YES Hedgelets are offered for sale for $5.65. Trader A, expecting that the price of gasoline will be above $2.00 on the specified date, purchases the 100 YES Hedgelets for $565. He may then do any of the following: offer them for a higher price, sell them later to another trader bidding a higher price, or hold them until expiration. If he holds the Hedgelets and the price of regular gasoline is greater than $2.00 as of Dec. 31, 2004, he will receive $1,000 ($10 for each Hedgelet held). His profit will be $435, minus the small fees for his transactions. On the other hand, if Trader A turns out to be wrong and on Dec. 31, 2004, the price of regular gasoline is less than or equal to $2.00, his 100 YES Hedgelets will be worthless, and his loss will be $565, plus the small fees for his transactions.

Because its Hedgelets are based on simple, explicitly-stated future events, and the potential gains and losses from a particular position are always readily apparent, HedgeStreet makes trading this new class of financial instruments simple and straightforward.

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Lisa
Lisa
1 year ago

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A simplified derivative instrument that allows investors to hedge or speculate on economic events such as housing prices, commodity prices, interest rates, currencies and economic indicators.

The price for a hedgelet contract is based on the prevailing market price determined by participants in the market. Every contract has the same defined payout scheme: $10 for a correct contract and $0 for an incorrect one. Each hedgelet contract is set so that investors must make a decision on whether an economic event will occur or not occur.

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certicex
certicex
1 year ago

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"Hedgelets" come in two varieties: binary options and capped futures.

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Kingpin
Kingpin
1 year ago

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HedgeStreet was a pioneering company in the derivatives exchange market, becoming the first online futures exchange to be officially approved and regulated by the United States (U.S.) government via the Commodities Futures Trading Commission (CFTC). Company founder John Nafeh came up with the idea for HedgeStreet in an effort make the futures market more accessible to the average "main street" investor. He thought this could be done by dividing up larger derivative contracts into smaller pieces, thus making them more affordable to small investors. Nafeh coined the term "hedgelet" to describe these fractional contracts. The word "hedgelet" is rooted in the word "hedge," which is used to describe the practice of using futures contracts as a kind of insurance against other investments. These hedgelets come either in the form of binary options or capped futures.

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Suneetha
Suneetha
1 year ago

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HedgeStreet has carefully designed its financial instruments, called Hedgeletsâ„¢, to make trading simple. Key features of Hedgelets include:

* Variety – Hedgelets are defined for a broad range of financially significant events, from interest and mortgage rates to commodity and real estate prices to manufacturing and employment statistics, so you can precisely hedge your particular risks—or speculate exactly where you feel you have the greatest edge.
* Simplicity – Each Hedgelet takes a YES or NO position on a single, explicitly-defined future event, such as whether the FOMC will raise interest rates at its next meeting, so your investment is always easy to understand.
* Low Price – A single Hedgelet never costs more than $10, so you can invest precisely the amount you choose.
* Limited Risk – There is no margin trading, so you can never lose more than you paid for the Hedgelets.

Hedgelets are the only instruments traded on HedgeStreet —and they can’t be traded anywhere else.

The HedgeStreet marketplace is open now at www.hedgestreet.com.

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Warren
Warren
1 year ago

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A simplified derivative instrument that allows investors to hedge or speculate on economic events such as housing prices, commodity prices, interest rates, currencies and economic indicators.

The price for a hedgelet contract is based on the prevailing market price determined by participants in the market. Every contract has the same defined payout scheme: $10 for a correct contract and $0 for an incorrect one. Each hedgelet contract is set so that investors must make a decision on whether an economic event will occur or not occur.

Investopedia explains Hedgelet
For example, on a "Crude Oil > $64" contract an investor can either choose Yes (oil will be more than $64 at expiration) or No (oil will be less than $64 at expiration). If the investor purchases one Yes "Crude Oil > $64" contract for $2, and crude oil ends at $80 when the contract expires, the investor will receive $10 - an $8 profit. However, if the price of crude oil ends at less than $64, the contract will be worthless and the investor will lose the initial $2 investment.

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Tyce
Tyce
1 year ago