An advantage or protection is secured by this type of transaction against a possible price increase of a traded item, like a commodity, financial instrument , security, and the like. These will be bought or sold in the future. It intends to provide some partial protection for buyers and consumers by securing at a fixed ceiling price a specific future supply. It intends to lock in an advantageous floor price for the seller. Also known as buy hedge, buying hedge, or purchasing hedge . Also refer to short hedge .
Black’s Law Online Dictionary
