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What is a naive?

Updated: 9/27/2023
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Wiki User

6y ago

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Naive hedging is where taking a hedge position without taking into consideration the level of hedging required. The optimal hedging position should be such that the expected position from the hedge perfectly offset the underlying risk.

Naive hedging (over hedging) could potentially lead to a substantial gain or loss position from hedging.

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Micaela Wilkinson

Lvl 10
2y ago
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