A method of hedging an option position with a position in vanilla options without altering or adjusting components for the purpose of coping with the passage of time. This method is an attempt to mimic the payout of a financial instrument in a way simpler and more straightforward than what a dynamic replication may require. Since this type of replication capitalizes on using options to hedge options, a portfolio constructed with static replication will be better hedged for gamma and volatility, as well as delta, than the one hedged using dynamic replication.

Furthermore, static replication can be used for hedging a position in exotic options with vanilla options, or for replicating a long-term option with short-term options. However, in real world, it is not always possible to hedge using static replication, especially that the wide variety of options and corresponding notional amounts can make it impracticable or uncontrollable.