1

hedge

noun \ ˈhej \
Updated on: 21 Nov 2017

Definition of hedge

1 a : a fence or boundary formed by a dense row of shrubs or low trees
b : barrier, limit
  • pikemen … present a hedge of metal points from which any cavalry would flinch
  • —Tom Wintringham
  • regarded it as the main function of their existence to raise a hedge around the law
  • —F. W. Farrar
2 : a means of protection or defense (as against financial loss)
  • realization that common stocks are the best hedge against inflation
  • —C. E. Merrill
3 : a calculatedly noncommittal or evasive statement
  • bureaucratic literature … festooned with hedges and qualifications
  • —Fortune

Examples of hedge in a Sentence

  1. the messenger was confronted with a hedge of spears held aloft by the castle guards

Recent Examples of hedge from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'hedge.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of hedge

Middle English hegge, from Old English hecg; akin to Old English haga hedge, hawthorn

Other Agriculture/Gardening Terms


2

hedge

verb

Definition of hedge

hedged; hedging
transitive verb
1 : to enclose or protect with or as if with a dense row of shrubs or low trees : to enclose or protect with or as if with a hedge (see 1hedge 1a) : encircle
  • homes hedged with boxwoods
2 : to confine so as to prevent freedom of movement or action : to obstruct with or as if with a barrier : hinder
  • hedged about by special regulations and statutes
  • —Sandi Rosenbloom
3 : to protect oneself from losing or failing by a counterbalancing action
  • hedge a bet
intransitive verb
1 : to plant, form, or trim a hedge
2 : to evade the risk of commitment especially by leaving open a way of retreat : trim
  • hedged on the issue
3 : to protect oneself financially usually used with against
  • in order to hedge against inflation
  • —George Katona
: such as
a : to buy or sell commodity futures (see 2future 3) as a protection against loss due to price fluctuation
b : to minimize the risk of a bet

hedger

noun

hedgingly

play \ˈhe-jiŋ-lē\ adverb

Examples of hedge in a Sentence

  1. The garden is hedged by flowering shrubs.

  2. She hedged when she was asked to support the campaign.

  3. He hedged his earlier comments about the need for new management.

Recent Examples of hedge from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'hedge.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of hedge

see 1hedge


3

hedge

adjective

Definition of hedge

1 : of, relating to, or designed for a hedge (see 1hedge)
  • a hedge plant
  • hedge selling on the commodity exchanges
2 : born, living, or made alongside or as if alongside a dense row of shrubs or low trees : born, living, or made near or as if near hedges (see 1hedge 1a) : roadside
  • the services of a hedge parson
  • a hedge wedding
3 : inferior 3
  • a hedge tavern

Recent Examples of hedge from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'hedge.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of hedge

see 1hedge

Other Agriculture/Gardening Terms


Financial Definition of HEDGE

hedge

What It Is

In finance, a hedge is a strategy intended to protect an investment or portfolio against loss. It usually involves buying securities that move in the opposite direction than the asset being protected.

How It Works

Let's assume part of your investment portfolio includes 100 shares of Company XYZ, which manufactures autos. Because the auto industry is cyclical (meaning Company XYZ usually sells more cars and is more profitable during economic booms and sells fewer cars and is less profitable during economic slumps), Company XYZ shares will probably be worth less if the economy starts to deteriorate. How do you protect your investment?

One way is to buy defensive stocks. These stocks might be from the food, utility, or other industries that sell productsThe definition of hedge on InvestingAnswers that consumers consider basic necessities. During economic slumps, these stocks tend to gain or at least hold their value. Thus, these stocks may gain when your XYZ shares lose.

Another way to hedge is to purchase a put option contract on the shares (this would essentially allow you to "lock in" a particular sale price on XYZ, so even if the stock crashed, you wouldn't suffer much). You could also sell a futures contract, promising to sell your stock at a set price at a certain point in the future.

Why It Matters

Hedging is like buying insurance. It is protection against unforeseen events, but investors usually hope they never have to use it. Consider why almost everyone buys homeowner's insurance. Because the odds of having one’s house destroyed are relatively small, this may seem like a foolish investment. But our homes are very valuable to us and we would be devastated by their loss. Using options to hedge your portfolio essentially does the same thing. Should a stock or portfolio take an unforeseen turn, holding an option opposite of your position will help to limit your losses.

Portfolio hedging is an important technique to learn. Although the calculations can be complex, most investors find that even a reasonable approximation will deliver a satisfactory hedge. Hedging is especially helpful when an investor has experienced an extended period of gains and feels this increase might not be sustainable in the future. Like all investment strategies, hedging requires a little planning before executing a trade. However, the security that this strategy provides could make it well worth the time and effort.



HEDGE Defined for English Language Learners

hedge

noun

Definition of hedge for English Language Learners

  • : a row of shrubs or small trees that are planted close to each other in order to form a boundary

  • : something that provides protection or defense


hedge

verb

Definition of hedge for English Language Learners

  • : to surround (an area) with a hedge

  • : to avoid giving a promise or direct answer


HEDGE Defined for Kids

1

hedge

noun \ ˈhej \

Definition of hedge for Students

: a fence or boundary made up of a thick growth of shrubs or low trees

2

hedge

verb

Definition of hedge for Students

hedged; hedging
1 : to surround or protect with a thick growth of shrubs or low trees
  • The yard is hedged by shrubs.
2 : to avoid giving a direct or exact answer or promise The more questions I asked, the more he hedged.

Law Dictionary

hedge

intransitive verb \ ˈhej \

legal Definition of hedge

hedged; hedging
: to reduce possible losses in speculative transactions by engaging in offsetting transactions (as futures trading)


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