Taking an offsetting position to reduce exposure to price moves.
From this site’s articles: "Market makers provide liquidity in the secondary market and hedge their exposure using the underlying securities."
Quoted passages come from the articles on this site.
Covered in: Why ETF Liquidity ≠ AUM · Why ETFs Surface Liquidity Constraints Faster Than Mutual Funds
Related terms
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Disclaimer
This material is provided for informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security.
All views expressed are the author’s own and do not represent the views of any employer or affiliated organization.