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Derivatives




Delta Hedging


A hedging technique which aims to make the price of a set (or portfolio) of derivatives immune to small movements in the prices of the derivatives’ underlying assets by fine-tuning the overall position’s delta.

For example, in options trading, long and short positions may be taken to offset each other so as overall deltas can be hedged. A long position in a call option can be hedged by selling or shorting the underlying security.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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