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Derivatives




Neutral Hedge Ratio


The option price sensitivity to a change in the price of its underlying. It represents the change in the price of an option (option price or premium) in response to every one-point change in the underlying. Mathematically, it is the first partial derivative of the option price with respect to the price of its underlying.

The neutral hedge ration is also called a hedge ratio or delta.



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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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