assume a near perfect hedge is created. $($general question$)$: How much can a "hedger" lost when entering into this near perfect strategy? $($If you need specifics: consider the following to be a near$-$perfect hedge: Owning a home $($$$450,000$ market price$)$ and buying a fire policy $($$$1,000$ annual fee$)$ that replaces everything if a fire wre to occur. The near$-$perfect hedge requires a $$5,000$ deductible and, of course, the premium amount$).$ IN this specific example, how much is lost if the hedge is udertaken