covering risk


(finance) using financial derivatives to guarantee against losses. typically used by non-traders, such as companies engaged in international commerce, to protect themselves against foreign exchange risk (i.e., the possibility that a customer’s currency will decline in value).
bill: you know, i think that financial derivatives are just a huge sinkhole. the people who trade them are just a bunch of w-nkers who move bits of paper around but add nothing of value.

anna: well, they do provide some important benefits.

bill: name one.

anna: covering risk, for one. if you’re an airline, you need those aviation fuel options.

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