what is an axe 
an axe or axe to grind is the interest that a trader shows in buying or selling a security that is typically already on the books if a trader holds a long position but has short term concerns that trader s axe toward short term put options may be significant likewise if a trader has risk exposure to an increase in interest rates they may have an axe to hedge against that risk many times a trader with an axe will keep that information private that is because if other market participants become aware of one s motivations they can take advantage of that information by offering unfavorable prices or withholding certain trades in order to exploit the situation understanding an axethe term axe is derived from the phrase axe to grind which means to possess an ulterior motive or selfish aim the phrase has historically meant to have a grievance with someone especially where one feels the need to seek retribution the phrase probably originates from the act of sharpening an axe with a grinding wheel with the intent in this definition to get revenge on someone by maiming or killing them traders often use the term axe to represent someone s particular interest in buying or selling a security that is already in their inventory or hedging against it the term was historically used to reference bond holdings but traders have expanded the use to include all securities in conversation the term is often used to speculate about a trader s plan with regard to a security that they hold axe should not be confused with ax which is a market maker central to the price action of a specific security 