# Automated Delta Hedging ⎊ Area ⎊ Resource 3

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## What is the Automation of Automated Delta Hedging?

This process involves the programmatic adjustment of a portfolio's net directional exposure, typically targeting a delta-neutral state relative to a specified benchmark. Such systems rely on continuous data feeds and pre-defined thresholds for initiating rebalancing trades. Effective implementation minimizes manual intervention, reducing operational latency in fast-moving crypto derivative markets.

## What is the Hedge of Automated Delta Hedging?

The primary objective is the neutralization of first-order price risk, or delta, associated with holding options positions. Maintaining this near-zero exposure requires constant monitoring and offsetting trades in the underlying asset or perpetual futures. Quantitatively, this involves calculating the aggregate sensitivity of the option book to small price changes.

## What is the Execution of Automated Delta Hedging?

Rebalancing trades must be executed with precision and speed to maintain the intended risk profile as volatility and underlying prices shift. The frequency of these adjustments is a critical parameter, balancing the cost of transaction fees against the risk of unhedged exposure. Successful deployment demands robust, low-latency connectivity to relevant exchange venues.


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## [Layer 2 Delta Settlement](https://term.greeks.live/term/layer-2-delta-settlement/)

## [Non-Linear Execution Costs](https://term.greeks.live/term/non-linear-execution-costs/)

---

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**Original URL:** https://term.greeks.live/area/automated-delta-hedging/resource/3/