Hedging currency risk in short stock positions (any different from long positions?) | Currency Futures


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Hedging currency risk in short stock positions (any different from long positions?)

  #7 (permalink)

Stockholm
 
Trading Experience: Intermediate
Platform: NinjaTrader, Multicharts, Tradestation
Favorite Futures: US and Canadian Stocks
 
ikeaboy's Avatar
 
Posts: 59 since Jun 2010
Thanks: 21 given, 5 received

is the net liquidation value the amount to hedge?

maybe i took a step forward with this problem... and maybe the long short positions arent even the problem...

i have a margin account which is say USD 50.000 and which is also the net liquidation value..

dont i always have to hedge the net liquidation value no matter how strongly i am invested and no matter if i am long or short or anything?!

e.g. i have one long position on 50 % margin and I invest fully, so i would carry a USD 100.000 position... but i cannot hedge the 50 K i dont even "own"? so i would just hedge the net liquidation value of 50.000 USD

Or i have a short position with usd 20.000 on 50 % margin.. which would mean i am 40.000 in cash and 10.000 usd is margin for the 20.000 short positon... i would still hedge the 40k cash + 10 k margin, hence 50k usd which is the net liquidation value?!..

... and as the time goes on i would adjust my hedging position in eur.usd e.g. weekly to hedge the new net liquidation value which resulted from either losses or profits?!..

did i overlook something or are my thoughts right?

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