re: hedging george
perhaps my $1m shares example was a little too cryptic for you.
perhaps you could show, using my example, how a 'hedged' share portfolio of $1m is better off than an unhedged one over a 5 or 10 year period.
I can assure you that the cost of purchasing xjo put options every quarter will destroy any profits the shareholder MAY incur.
Hedging over the long term does not increase profitability. It simply 'smoothes out' the cashflow for the company, so that one factor such as a spiking oil price doesnt have a sudden and fatal effect.
In the short term, if timed perfectly, hedging can be invaluable. If you were to buy XJO puts to protect your $1m portfolio on Sept 12 2001 for example, after the first days fall, you would have suffered a greatly reduced loss from then on. But had you bought puts every quarter regardless, you would have lost money.
QAN does not hedge the oil price so that it is completely immune from the rising oil cost (as some here are suggesting)....it cannot possibly avoid this cost forever. When the current hedge expires, it will cost a fortune to roll it over......
Hedging is a valid strategy for any business where rough conditions are forecast, but it is not a cheap solution. The 'smoothing' effect comes at a price, being lower long term profitability.
oh and a 'hedge' fund has jack 5hit to do with actual hedging of risk within the fund. Its a 'hedge' from the investors perspective because a hedge fund often profits from market falls or employs unusual strategies, and having some exposure to such a fund may 'hedge' their traditional buy & hold portfolio.
- Forums
- ASX - By Stock
- QAN
- what are people thinking
what are people thinking, page-27
-
- There are more pages in this discussion • 6 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Add QAN (ASX) to my watchlist
(20min delay)
|
|||||
Last
$7.18 |
Change
0.010(0.14%) |
Mkt cap ! $11.22B |
Open | High | Low | Value | Volume |
$7.21 | $7.21 | $7.08 | $27.81M | 3.893M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
2 | 1584 | $7.17 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$7.19 | 61001 | 7 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
2 | 3121 | 7.130 |
1 | 27614 | 7.120 |
5 | 92790 | 7.110 |
3 | 57567 | 7.100 |
1 | 2000 | 7.090 |
Price($) | Vol. | No. |
---|---|---|
7.190 | 34283 | 5 |
7.200 | 58807 | 14 |
7.210 | 33238 | 3 |
7.220 | 9935 | 6 |
7.230 | 6686 | 4 |
Last trade - 16.10pm 14/10/2024 (20 minute delay) ? |
Featured News
QAN (ASX) Chart |
The Watchlist
I88
INFINI RESOURCES LIMITED
Charles Armstrong, Managing Director & CEO
Charles Armstrong
Managing Director & CEO
SPONSORED BY The Market Online