RISK MANAGEMENT OF INVESTMENT CAPITAL IN THE STOCK MARKET: THEORY AND PRACTICE OF HEDGING

Abstract

The article examines the theoretical and applied aspects of investment capital risk management in the stock market, with a particular focus on the use of hedging strategies. Investment capital is considered as a limited economic resource that operates under conditions of uncertainty, financial market volatility, and the influence of behavioral factors. It is substantiated that in modern conditions the key objective of investment management is not the maximization of short-term returns, but the preservation of capital and control of an acceptable level of risk. The study systematizes the essence, principles, and functions of investment capital risk management and provides a classification of the main types of risks, including market, interest rate, currency, liquidity, operational, and psychological risks. It is demonstrated that hedging serves as an important tactical instrument within the strategic framework of risk management, ensuring the transformation of uncontrolled market uncertainty into a manageable financial parameter. Special attention is paid to options as instruments of asymmetric risk management and to the construction of option-based strategies of the Collar type. The empirical part of the study is based on the analysis of real investment cases involving the hedging of positions in a cryptocurrency-exposed exchange-traded fund (IBIT) and in the shares of the industrial company Caterpillar Inc. (CAT). On the basis of financial calculations, payoff tables, and profit and loss profiles, it is proven that the application of the Collar strategy makes it possible to significantly limit downside risk, ensure the predictability of financial results, and preserve a positive investment outcome even under conditions of high market turbulence. The obtained results confirm the feasibility of integrating option-based strategies into the investment capital risk management system and may be applied in the practice of both private and institutional investors to enhance the stability and controllability of investment decisions.