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Delta hedge

• Is a risk management operation which uses derivative instruments against actual underlying securities or instruments. The composite option characteristic of the combined trade indicates the market exposure experienced by the trading or investing entity at that moment in time. When the market price or interest rate exposure is essentially minimized to zero, then the hedge is considered Delta Neutral.

• A dynamic hedging strategy using options with continuous adjustment of the number of options used, as a function of the delta of the option.

 
 Embedded terms in definition
 Delta neutral
Delta
Derivative instruments
Derivative
Dynamic hedging
Hedge
Hedging
Instruments
Interest rate exposure
Interest rate
Interest
Market
Options
Option
Risk management
Risk
Securities
Time
Trade
Trading
Underlying
 
 Related Terms
 

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