Hedging Strategies Using Financial Derivatives and Structured Products

Abstract

Hedging is a critical risk management technique that enables investors, corporations, and financial institutions to mitigate potential losses arising from market volatility. Financial derivatives and structured products have emerged as essential instruments for hedging strategies, allowing market participants to manage exposures efficiently. This review explores the various types of financial derivatives and structured products used for hedging purposes, their applications, advantages, limitations, and the regulatory framework governing their use. Furthermore, the paper provides insights into the role of financial innovation in enhancing risk management strategies and mitigating financial uncertainties.