a great number of customers ask me as to what set-up hedge is.
Set-up hedge means an arbitrage strategy involving a long position in a convertible security and shorting its underlying stock. A set-up hedge looks to capitalize on mispriced conversion factors, while isolating risk unrelated to the error. The trader will profit when the underlying asset appreciates, increasing the premium on the convertible security.
A set-up is a type of convertible arbitrage. A convertible security, such as a bond with an option to convert to shares, sells at a premium to reflect the cost of the option. The trader hopes that the underlying asset will rise in value, correcting the mispriced conversion factor, making the long position in the convertible profitable. By hedging his long position through shorting the underlying, the investor is protected by depreciations in the bond.
This is the opposite of executing a "Chinese Hedge".
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explaining some online foreign exchange brokers concepts
(5 posts)-
Posted 8 months ago #
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when learning howto study the present market layout, 1'd best pay negligible mind to events connected to the primary sector industry, for example the fact that the fall in the construction and building materials imports are going to change the economy in North America and accelerate the industry's recovery, and concentrate on trade ing tips like the proposition that the Kenyan Shilling is predicted to top versus the U.S Dollar before the 2nd next month.
Posted 7 months ago # -
halegarret, apparently the postulate that the KES-USD is assumed to move downward towards January 22 began surfacing around the time that the markets around the country are forecast to steep and cause the KES-USD rates to reach peak (that if true) would account for the KES's downswing.
Posted 7 months ago # -
what armed_camryn said
Posted 7 months ago # -
what armed_camryn said
Posted 7 months ago #
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