Derivatives Strategies
Delta Hedging
Definition
What is Delta Hedging?
Adjusting an underlying position to offset an option portfolioThe complete collection of investments owned by an investor or managed under one mandate.'s delta.
Example in practice
How This Looks in Practice
The dealer buys shares as call-option delta rises.
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Related Terms
Derivatives Strategies
Covered Call
A strategy that owns the underlying asset and sells call options against it.
Derivatives StrategiesProtective Put
A strategy that owns an asset and buys a put to limit downside.
Derivatives StrategiesCollar
A strategy combining a protective put with a written call, often to reduce hedging cost.
Option GreeksDelta
The estimated change in an option's price for a small change in the underlying price.