Haircut
The difference between the actual market value of a security and the value appraised by the lending side of a transaction.
Hedge
An investment made with the intention of minimizing the impact of adverse movements in interest rates or securities prices.
Ratio between the change in a security's theoretical value and the change in price of the underlying stock at a given point in time.
Hedger
A hedger protects himself against changing cash prices by purchasing (selling) futures contracts of the same or similar commodity and later offsetting that position by selling (purchasing) futures contracts of the same quantity and type as the initial transaction.
Hedging
The practice of offsetting the price risk inherent in any cash market position by taking an equal but opposite position in the futures market. Hedgers use the futures markets to protect their business from adverse price changes. Selling (Short) Hedge - Selling futures contracts to protect against possible declining prices of commodities that will be sold in the future. At the time the cash commodities are sold, the open futures position is closed by purchasing an equal number and type of futures contracts as those that were initially sold. Purchasing (Long) Hedge - Buying futures contracts to protect against a possible price increase in cash commodities that will be purchased in the future. At the time the cash commodities are bought, the open futures position is closed by selling an equal number and type of futures contracts as those that were initially purchased. Also referred to as a buying hedge.
High
The highest price of the day for a particular futures contract.
High-grade bonds
Top-rated bonds, usually triple-A, that carry relatively little risk.
High yield bonds
Also called "junk bonds". These bonds are usually rated lower than BBB/Baa and are considered speculative compared to investment grade bonds. The yields are also higher on these bonds than on investment grade bonds.
Historic volatility
The security's or similar securities' volatility over past periods.
Hog/corn ratio
The relationship of feeding costs to the dollar value of hogs. It is measured by dividing the price of hogs ($/hundredweight) by the price of corn ($/bushel). When corn prices are high relative to pork prices, fewer units of corn equal the dollar value of 100 pounds of pork. Conversely, when corn prices are low in relation to pork prices, more units of corn are required to equal the value of 100 pounds of pork. A ratio used to express the relationship of feeding costs to the dollar value of livestock.
The purchaser of either a call or put option. Option buyers receive the right, but not the obligation, to assume a futures position. Also referred to as the option buyer.
The purchase of either a call or put option and the simultaneous sale of the same type of option with typically the same strike price but with a different expiration month. Also referred to as a calendar spread.
Hospital revenue bonds
Bonds issued by a municipal or state agency to finance construction maintenance or operation of hospitals or nursing homes.
Housing bonds
Bonds issued by a municipal or state agency to finance construction of a single-family or multi-family housing.