Chinese Hedge

Chinese Hedge
A position that protects investors from risk, involving a short position in a convertible security and a long position in its underlying asset. The Chinese hedge looks to capitalize on mispriced conversion factors. The trader will profit when the underlying asset depreciates, diminishing the premium on the convertible security.

Also known as a "reverse hedge".

The Chinese hedge is a type of convertible arbitrage. A convertible security, such as a bond with an option to convert into shares, sells at a premium to reflect the cost of the option. The trader hopes that the underlying asset will drop in value, making the short position on the convertible profitable. By hedging his short position through longing the underlying, the investor is protected by large appreciations.

This is the opposite of executing a "set-up hedge".


Investment dictionary. . 2012.

Игры ⚽ Поможем сделать НИР

Look at other dictionaries:

  • Chinese hedge — Applies mainly to convertible securities ( convertible security). Trading hedge in which one is short the convertible and long the underlying common, in the hope that the convertible s premium will fall. Antithesis of setup. Bloomberg Financial… …   Financial and business terms

  • Chinese emigration — Chinese diaspora redirects here. For other uses, see Overseas Chinese. Map of Chinese Migration from the 1800s to 1949. Waves of Chinese emigration (also known as the Chinese Diaspora) have happened throughout history. The mass emigration known… …   Wikipedia

  • Chinese accounting standards — are the accounting rules used in Chinese state owned corporations in mainland China. They are currently being phased out in favour of generally accepted accounting principles or International Accounting Standards. As of February 2010, the Chinese …   Wikipedia

  • Chinese financial system — Beijing Financial Street, the economic centre of Beijing. China s financial system is highly regulated and has recently begun to expand rapidly as monetary policy becomes integral to its overall economic policy. As a result, banks are becoming… …   Wikipedia

  • Chinese economic stimulus program — The stimulus includes plans to rebuild areas damaged by the 2008 earthquakes.[1] The 2008–2009 Chinese economic stimulus plan (simplified Chinese: 扩大内需十项措施; traditional Chinese …   Wikipedia

  • Chinese literature — Introduction       the body of works written in Chinese, including lyric poetry, historical and didactic writing, drama, and various forms of fiction.       Chinese literature is one of the major literary heritages of the world, with an… …   Universalium

  • hedge bamboo — tvorinis bambukas statusas T sritis vardynas apibrėžtis Miglinių šeimos bambukinių pošeimio dekoratyvinis augalas (Bambusa multiplex), paplitęs Azijos atogrąžose. Jo stiebai naudojami dirbiniams. atitikmenys: lot. Arundo multiplex; Bambos nana… …   Lithuanian dictionary (lietuvių žodynas)

  • Chinese currency — Han Dynasty cash coin The Renminbi (Chinese: 人民币) is the official currency of the People s Republic of China (PRC). It is the legal tender in mainland China, but not in Hong Kong and Macau. It is abb …   Wikipedia

  • Chinese yuan — This article is about the Chinese base unit of currency known as the yuan. For the modern Chinese currency used in the People s Republic of China, see Renminbi. Kuai redirects here. For a Chinese dish, see Kuai (dish). Collection of Chinese… …   Wikipedia

  • Chinese property bubble — An empty corridor in the mostly vacant New South China Mall. The Chinese property bubble is an alleged ongoing real estate bubble in residential and/or commercial real estate in the People s Republic of China. The phenomenon has seen average… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”