There are different kinds of trade. Trading in foreign currency options would most likely be an appropriate hedging tool for individual investors who want to hedge the risk on specific U.S. exchange-listed stocks.
An example, when an American importer is said to agree to buy some food equipment from a Chinese manufacturer at a later future date. The transaction will be carried out in Chinese currency.
The American importer has therefore made an hedge by buing currency options on the Chinese currency.
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