Simple Conversations  

Today, in birthday party the highlights was Food, College days and Finance. 

Few things which I learned today and most simple was  simple conversations was about Hedging. 

For example you buy a share of a company A for $100. If the shares goes up and you meet your exit criteria of 20%, you sale it and your net net profit is 20% minus trading cost and tax you will pay on 20%. 

Now, if the shares goes down 20%. The new price is $80. You  buy one more share. 

Mathematical, 

No of shares = 2

Total cost = 180 and 90 per share. 

If the shares goes down – will come to that example. 

If the shares goes up to 97 and then now you sale and you make a profit of 7 dollars each. 

This is what is an example of hedging.  

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