| January 6, 2009 | Delta Hedging Definition: Options strategy that hedges the associated risk within price movements of underlying securities by offsetting short and long positions. Based on the change in the pricing of options caused directly by the change in the price of the underlying asset. The change in option price relating to the base point change in price of the underlying asset is the delta and the hedge ratio is the relationship of the two movements. Typically the higher the hedge ratio, the greater the overall percentage movement and the greater the leverage. Options would be bought rather than sold with the higher ratio as they make more gains, and vice versa for options with a low hedge ratio, i.e. selling them. For example, a long call position could be delta hedged by shorting the underlying stock Related Articles: Related Terms: Back to Glossary |
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| CEO Spends $4.58 Million on Massive Insider Buy! It could be the greatest tip-off of all time. The CEO of a small, fast-growing company just dipped into his own wallet to buy $4.58 million of his company’s shares… and not in some secret insider deal, but on the open market. What set off the spending spree? This CEO’s company is in a brand new federally-funded sector - one that didn’t exist seven years ago. Huge amounts of dollars are flowing in. What's more, he paid $15 a share, but the recent market swoon means you could pay as little as $12.50. This is a pure double-up situation. Keep reading... Find out more now |
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