Southwest airlines is known for hedging management strategy.
What is hedging?
A hedge is a position in the market used to counteract any gains or losses that might be experienced by a companion investment. Stocks, exchange-traded funds, insurance, forward contracts, swaps, options, bets, other over-the-counter and derivative products, futures contracts, and other financial instruments can all be used to create a hedge.
In order to facilitate transparent, standardized, and effective hedging of agricultural commodity prices, public futures markets were created in the 19th century. Since then, they have grown to include futures contracts for hedging the values of energy, precious metals, foreign exchange, and interest rate fluctuations. The concept of hedging involves taking a stake in one market to balance and offset the risk taken by holding a position in a different, opposing market or investment.
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