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Hedging Controversy

Posted By: Tom Keith
Date: Saturday, 15 October 2011, at 8:37 p.m.

In Response To: Hedging Controversy (MFIC)

I believe that the hedge amount (let's say X% of $1500) is NOT due at this point. Rather, I'd make the payout dependent on the B's actually getting a cash prize ...

That sounds like a reasonable solution. The standard understanding is that the "loser" of a hedge doesn't have to pay until he himself has been paid.

I would not make the amount payable dependent on future hedges. If B cashes in the tournament, he should pay X% of the money awarded by the tournament. (If B wants to hedge with his portion of those winnings, that's up to him.)

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