How Hedging Can Reduce Portfolio Risk

February 2, 2024 Beginner
Hedging with futures may help reduce risk in a portfolio. Lower volatility can translate into lower risk.
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Are futures right for your trade plan?

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This material is intended for informational purposes only and should not be considered a personalized recommendation or investment advice.  Investors should review investment strategies for their own particular situations before making any investment decisions.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Investing involves risks, including the loss of principal invested.

Past performance is no guarantee of future results.

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Futures and futures options trading involves substantial risk and is not suitable for all investors. Please read the Risk Disclosure for Futures and Options prior to trading futures products. Futures accounts are not protected by SIPC. Futures and futures options trading services provided by Charles Schwab Futures and Forex LLC. Trading privileges subject to review and approval. Not all clients will qualify.

Leverage also carries a high level of risk and is not suitable for all investors. Greater leverage can create much greater losses quickly and with small price movements of the underlying futures contract. (Or "…and with smaller market movements.")

Futures and futures options trading services provided by Charles Schwab Futures and Forex LLC. Trading privileges subject to review and approval. Not all clients will qualify.

Charles Schwab & Co., Inc. ("Schwab") and Charles Schwab Futures and Forex LLC ("Schwab Futures and Forex"), are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation. Securities brokerage products are offered by Schwab (Member FINRA/SIPC). Schwab Futures and Forex is a CFTC-registered Futures Commission Merchant and a NFA Member and offers brokerage services for futures and commodities.

Schwab Futures and Forex makes no investment recommendations and does not provide financial, tax, or legal advice. Content and tools are provided for educational and informational purposes only. Any stock, options, or futures symbol displayed are for illustrative purposes only and are not intended to portray a recommendation to buy or sell a particular product.

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