A naïve hedge is when a noncash asset is hedged on an indirect dollar-for-dollar basis with a looking back contract.

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A naïve hedge typically refers to a simple, direct hedging approach where an investor or company uses a straightforward strategy, such as buying a futures contract to offset a potential loss in an asset they own. It does not involve complex or indirect methods like a "looking back contract."

A Naïve Hedge Is When a Noncash Asset Is Hedged