Derivatives Strategies

Dynamic Hedging

Definition

What is Dynamic Hedging?

Repeatedly adjusting a hedge as market conditions or exposures change.

Example in practice

An option desk rebalances its share hedge throughout the day.

Keep learning

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.

Think you know your investing terms?

Put your knowledge to the test with a quick quiz.