Hedge ratio: The ratio of the size of the position it is necessary to take in a particular instrument as a hedge against another, to the size of the position being hedged.
Hedging: Protecting against the risks arising from potential market movements in exchange rates, interest rates or other variables. See arbitrage, cover, speculation.
Herstatt risk: See settlement risk.
High coupon swap: Off-market coupon swap where the coupon is higher than the market rate. The floating-rate payer pays a front-end fee as compensation. Opposite of low coupon swap.
Historic rate rollover: A forward rate swap in FX where the settlement exchange rate for the near date is based on a historic off-market rate rather than the current market rate. This is prohibited by many central banks.
Historic volatility: The actual volatility recorded in market prices over a particular period.
Historical simulation methodology: Method of calculating value-at-risk (VAR) using historical data to assess the likely effect of market moves on a portfolio.
Holder: The holder of an option is the party that has purchased it.