Module VI — Hedge Engineering and Vector Exposure

Status: outline. Lecture body not authored. Phase: 4 HEDGE

Hedges from economic exposure, not lot equality.

E(c,t)   currency exposure vector
R(s,t)   residual

Not:

1 lot long = 1 lot short

Unique process — Vector hedge

Contract sizes, base, quote, account currency, and numerario enter the hedge. Broker A contract_size = 100,000 and Broker B contract_size = 10,000 imply 1 lot A ≠ 1 lot B; an equivalent hedge can require 1 : 10.

Contents (curriculum): base / quote; currency exposure vector; account currency exposure; E(c,t); R(s,t); per-symbol neutrality; contract-size mismatch; lot grid; residual exposure; cross-broker basis.

Lab: a two-leg carry cell with notional neutrality.