Hedging is a risk management strategy used to reduce or mitigate potential losses or gains from an investment or transaction. It involves taking a position in a security or asset that offsets the risk of another investment or position. In the context of options and futures, hedging is used to:

- Lock in prices for future transactions

- Reduce exposure to market volatility

- Protect against potential losses or gains

- Manage risk associated with an investment or position

Hedging is often used by investors, businesses, and institutions to manage risk and stabilize their financial positions. For example, an airline company may hedge against fuel price increases by buying fuel futures contracts, or a farmer may hedge against crop price fluctuations by selling futures contracts.

It's important to note that hedging is not a guarantee against losses, but rather a strategy to manage and reduce risk.