A hedge is selling without selling
Closing a position and hedging it reach a similar place — flat exposure — by different routes. You hedge instead of close when selling is expensive or undesirable: you'd realise a taxable gain, you'd lose a hard-won entry you want to keep, or you only want the protection for a few days through a known event (an unlock, a governance vote, a CPI print, an exchange-listing dump). Open an opposite position of the same notional and your net delta goes to zero — the long's loss in a dip is matched by the short's gain, and vice versa. You keep your original position on the books.
It isn't free. While both legs are open you pay or receive funding each window, plus the fees to open and close the hedge. The nice case: if funding is positive and you short to hedge a long, you receive funding on the short — sometimes enough to make the hedge a small carry rather than a cost. The figure that matters is the net funding across both legs, which this calculator works out. Size the hedge with the position size calculator, dig into the funding maths with the funding calculator, and if you're hedging a leveraged position, keep an eye on the un-hedged leg's liquidation price — a hedge protects P&L, not your margin on the original leg.
How to use it
1. Set whether your open position is long or short — the hedge is the opposite.
2. Enter its notional size and choose a hedge ratio (100% = fully neutral, less = partial).
3. Add the funding rate on each leg and the price move you want to stress-test.
4. Read the hedge size, residual exposure, daily funding cost, and the protected P&L table.
Common mistakes
Forgetting the hedge has funding too. A full hedge held for weeks can quietly bleed funding and fees; check the net rate before assuming it's cheap. Hedging the wrong notional. Match notional (size × price), not margin — equal margin at different leverage leaves you exposed. Thinking a hedge saves your margin. It neutralises P&L, but each leg still has its own liquidation; a one-sided liquidation un-hedges you instantly. Over-hedging through a thesis. A 100% hedge kills the upside too — if you still believe in the trade, a partial ratio keeps some.
FAQ
Can I hedge on the same exchange? On many you'd need hedge-mode or a second account, since one-way mode nets the positions. Cross-exchange or spot-vs-perp hedges sidestep that and can capture a funding spread.
What's a delta-neutral position? One where your net directional exposure is zero — a 100% hedge. You no longer profit or lose from price direction, only from funding, basis or fees.
Is a partial hedge worth it? Often, yes. Cutting exposure 50% through a risky window halves the downside while keeping half the upside and half the funding cost — a middle path between holding and closing.