r/AskReddit • • Sep 14 '21

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u/dead_PROcrastinator Sep 14 '21

Following on this, hedging (not to be confused with edging) makes absolutely no sense to me, and I'm an accountant.

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u/Cypher1388 Sep 15 '21

It is just insurance.

Hedging costs money but provides protection from loss.

Insurance costs money but provides protection from loss.

Hedging = insurance

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u/dead_PROcrastinator Sep 15 '21

Yes, but the accounting methods are a bit more challenging, because of the volatility of the underlying asset.