Dynamic hedging: Difference between revisions
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imported>Doug Williamson (Identify options context.) |
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* [[Hedge ratio]] | * [[Hedge ratio]] | ||
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[[Category:Financial_products_and_markets]] | |||
Latest revision as of 19:51, 7 October 2018
Options trading and hedging.
Dynamic hedging recognises that the hedge ratio depends - among other things - on the current market price of the underlying asset.
So that as the underlying market price changes, the amount of the hedging instrument held needs to be adjusted dynamically, in line with the changing hedge ratio.
