Hedging
Fundamental analysisUsing contracts to reduce exposure to a price or rate.
In plain terms
Not automatically prudence — hedges cost money and expire. Watch the extremes.
1492 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
Showing 3 terms
Read the full lesson →
Max pain
DerivativesThe strike at which the largest rupee value of options would expire worthless, causing the greatest aggregate loss to option buyers.
In plain terms
There is a partial mechanism — writers hedging their exposure do exert some pull near expiry — but it is weak, easily swamped by news, and it recalculates as open interest shifts.
Option chain
DerivativesThe strike-by-strike table of open interest, change in open interest, volume and implied volatility for an underlying's options, published live and free by the NSE.
In plain terms
The strike with the largest call open interest often acts as resistance and the largest put strike as support, because writers hedging those positions generate real buying and selling. One source of confluence, not a forecast.