Hi,How does an investment bank hedge a Contingent Forward Sale? I understand that these products are popular in US corporate equity derivs space. The products look like series of call overwriting but am interested to know exactly how the banks hedge their exposure.The definition that I am aware of the product is as below:In a Contingent Forward Sale, a shareholder enters into a contract to sell a pre-determined number of shares each trading day over a defined period of time. The shareholder will sell shares, each trading day, if the closing stock price is greater than the pre-determined stock price (referred to as the "Contingent Price"). If the closing price is equal to or less than the Contingent Price, no shares are sold. The sale price for the shares will be a pre-determined premium to the Contingent Price (referred to as the "Forward Sale Price"). On the maturity date of the contract, the client will deliver the shares to the bank and receive the sale proceeds.

You can settle in cash or stock --- sounds like you have the basic concept, but I will say, the Desk that has the reponsiblity to hedge in any manner fitting. so, the sell calls, they sell puts, ect....their cost of funds is also, very, very low.