Question

Delta Hedging

Answer 1

Delta Hedging - It refers to the strategy where we hedge the delta influence. Delta broadly refers to change in price movement of the option with respect to the change in the underlying asset. Delta hedging is generally done by counteracting a long position by a short position and vice versa.This strategy utilizes other forces of option, i.e. gamma (rate of change of option premium w.r.t change in delta), theta (rate of change of option premium w.r.t time) and vega (rate of change of option premium w.r.t volatility).

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