Earl Grey Lithium Project, page-61

How do you not get this.

Basic basic version of this so you can read and understand (numbers demonstrative only)

Someone bought $5k of KDR at 40c and $1k of MZN at 1.6c (roughly the correct numbers as of Nov last year). Personally I went 10:1 so would have been $5k:$500 but thats beside the point. Total investment is $6k

Now, let's say MZN lose. Let's assume parcel is unmarketable and constitutes a zero. Then let's assume KDR bounces to say 80c back near previous highs. Forget even getting to $1.80. The KDR parcel is now worth $10k and profits are $4k over initial investments vs someone who didn't hedge and made $5k.

Now considering the converse. MZN wins and KDR share price falls to 10c. That parcel is now worth 1.25k. MZN 5 bags over time. That parcel is now worth $5k. Total profit is $250.

If you didn't hedge you make a profit of 5k vs 4k i.e an outperformance of 25% on a KDR win. If KDR loses you lose 3.75k vs making $250. Which is a 79% under performance.

Of course it isn't an exact science and it's not a guaranteed win as per "the lecturer", however hedging does shift the risk/reward position significantly in the favour of the hedger.

Hence despite maths skills he is a newb in the market and has a lot to learn.