Option Greeks: Delta Hedging

Option Greeks: Delta Hedging

Intuition Publishing Pty Ltd
Updated Sep 24, 2020

In order to try and hedge the risk associated with movements in the price of the underlying asset, option traders engage in delta hedging strategies. We discuss positional exposure and delta hedging, investigate how delta neutrality can be achieved, demonstrate how traders can delta hedge portfolios of different instruments, and finally compare model and real world delta hedge ratios.