Put money in Uber. Hedge with money in Lyft. Uber goes hockey stick, you’re golden. Lyft goes parabolic while Uber is still trying and now losing? Hedge.
Taxi industry may fail entirely? Sell puts on car max because market will soon be flooded with depreciating assets (cars) from drivers who no longer taxi. Hedge.
Hedging is not an inverse, it is protection on your original investment. A lot of the times this is simply an opposite investment such as calls to puts or puts to calls. But nothing saying you can’t protect your FB (Libra) Or JPMorgan bets by buying bitcons, etc. Hedge.
> Taxi industry may fail entirely? Sell puts on car max because market will soon be flooded with depreciating assets
Why would you do that? When you sell puts, your upside is limited to the premium and the downside is close to unlimited (the full value of all the shares at strike price). Whereas if you were to buy calls, your downside is limited and upside is unbounded.
And FWIW, speaking in layman's terms, I would consider two long positions with opposite prospects to be inverse.
What does hedging mean in startup investing? I'm used to the meaning in securities where you take an inverse position to limit losses.