[finance-geek]

Easy -- for an "imperfect hedge", find a comparable company and sell an opposite instrument. If you are holding illiquid stock in VenMo for example, buy puts on either a the NASDAQ or PAYPAL. As the value of one goes up, the value of the other generally goes down, you are generally even.

For a "perfect hedge", find a counterparty willing to bet on the price of what you own (perhaps they have an opposite exposure) and have them take the opposite side of a forward or swap for your illiquid stock.

[mikeyouse]

Good explanation, but maybe use Dwolla instead of Venmo (Paypal bought Braintree a few years ago, which had bought Venmo prior to that -- So Venmo is now a subsidiary of Paypal).