Page 83 - PRIAA Glossary

HEDGING
A trading strategy which is designed to reduce or mitigate risk. A second transaction is entered into to offset the risk of the first. A hedge is used to reduce any substantial losses/ gains suffered by an individual or an organisation.
HENRY HUB
A natural gas distribution location in Erath, Louisiana, USA. It is an important location from a natural gas distribution and pricing perspective because nine interstate and four intrastate natural gas pipelines interconnect here. Henry Hub is the settlement point for NYMEX futures contracts, as well as futures contracts on exchanges such as ICE.
HIGH
The highest trading price of the period for a particular security.
HIGH WATERMARK
A designation for a fund that denotes the highest net asset value (NAV) obtained by that a fund—and for which a performance fee was paid. Should the investment drop in value, the manager must then bring it back above the previous greatest value before he or she can receive performance fees again.
HIMALAYA
A mountain range option where the payout is based on the average performance of the best-performing component in the basket on each calculation date. The number of components in the basket reduces over the life of the option as the best performer on each calculation date is removed for future calculations, so that on the last calculation date there is only one underlying asset in the basket.
HISTORICAL SIMULATION
Randomly selecting historical returns or events as a prediction of the future.
81
H