Hedge ratio: Difference between revisions
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== See also == | == See also == | ||
* [[Dynamic hedging]] | * [[Dynamic hedging]] | ||
[[Category:Manage_risks]] | |||
Revision as of 15:26, 1 July 2022
The proportion of a hedging instrument required to hedge an underlying position, compared with the amount of the underlying position itself.
Example
If four options are required to hedge a position of one unit of the underlying asset:
Hedge ratio = ¼
= 0.25.
