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Hedges Are Like Pets
Hedges are like pets. Simple breeds are often best; exotic ones may look impressive but require constant care and can turn on you at the worst possible moment.
Sizing matters. A small dog may not deter an intruder; a large one can overwhelm a small apartment. Oversized hedges create similar problems: strained liquidity, stressed credit limits, and operational risk when markets become unpredictable.
Pets require grooming. So do hedges: roll adjustments, ratio checks, and regular reporting. Neglect the pet and the carpet pays the price; neglect the hedge and the consequences are far more expensive.
And just like a family shares responsibility for a pet, effective hedging demands coordination across trading, risk, and operations. A clear policy, disciplined execution, and consistent care are what keep a hedge best in show.
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