Which of the following best describes the strategy of a hedger?

The strategy of a hedger is best described by the concept of locking in prices to reduce risk. Hedging involves taking a position in a financial market to offset potential losses in another investment. By locking in prices, a hedger aims to protect themselves from the adverse effects of price fluctuations in the underlying asset. This means that if the price moves unfavorably, the hedger has a safeguard in place that can help them manage the financial impact, thereby stabilizing their cash flow and reducing uncertainty.

In contrast, other strategies listed focus on different market approaches. For example, gambling on future price movements involves significant risk-taking and a speculative nature, while speculating on price volatility is about profit from the expected changes in price, not necessarily protecting against losses. Buying and holding for capital appreciation focuses on a long-term investment strategy with the hopes of increasing asset value over time, rather than managing risk through hedging.