Dynamic hedging: Difference between revisions
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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. | 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. | ||
== See also == | == See also == | ||
* [[Hedge ratio]] | * [[Hedge ratio]] | ||
* [[Market price]] | * [[Market price]] | ||
Revision as of 12:33, 22 June 2016
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.
