Derivatives Strategies

Delta Hedging

Definition

What is Delta Hedging?

Adjusting an underlying position to offset an option portfolio's delta.

Example in practice

The dealer buys shares as call-option delta rises.

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A strategy that owns the underlying asset and sells call options against it.

A strategy that owns an asset and buys a put to limit downside.

A strategy combining a protective put with a written call, often to reduce hedging cost.

The estimated change in an option's price for a small change in the underlying price.

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