# Delta Hedging Strategy ⎊ Area ⎊ Resource 3

---

## What is the Strategy of Delta Hedging Strategy?

Delta hedging is a risk management strategy used to neutralize the directional exposure of an options portfolio. The strategy involves taking an offsetting position in the underlying asset to maintain a delta-neutral state. This approach aims to protect the portfolio from small price movements in the underlying asset.

## What is the Adjustment of Delta Hedging Strategy?

The core principle of delta hedging requires continuous adjustment of the hedge position as the underlying asset price changes. This rebalancing process, known as re-hedging, ensures the portfolio's delta remains close to zero. The frequency of these adjustments depends on market volatility and transaction costs.

## What is the Risk of Delta Hedging Strategy?

While delta hedging mitigates directional risk, it introduces other risks, notably gamma risk and transaction cost risk. Gamma risk arises from the non-linear change in delta as the underlying price moves, requiring more frequent rebalancing. High transaction costs in volatile crypto markets can erode the profitability of a delta hedging strategy.


---

## [Black-Scholes Calculation](https://term.greeks.live/term/black-scholes-calculation/)

## [Algorithmic Order Book Development Tools](https://term.greeks.live/term/algorithmic-order-book-development-tools/)

## [Cross-Chain Delta Management](https://term.greeks.live/term/cross-chain-delta-management/)

## [Zero-Knowledge Succinct Non-Interactive Arguments](https://term.greeks.live/term/zero-knowledge-succinct-non-interactive-arguments/)

## [Order Book Volatility](https://term.greeks.live/term/order-book-volatility/)

## [Recursive Proofs](https://term.greeks.live/term/recursive-proofs/)

## [Game Theory of Exercise](https://term.greeks.live/term/game-theory-of-exercise/)

## [Order Book Data Aggregation](https://term.greeks.live/term/order-book-data-aggregation/)

## [Blockchain Derivatives](https://term.greeks.live/term/blockchain-derivatives/)

## [Non-Linear Margin Calculation](https://term.greeks.live/term/non-linear-margin-calculation/)

## [Transaction Execution Cost](https://term.greeks.live/term/transaction-execution-cost/)

## [Delta Exposure](https://term.greeks.live/term/delta-exposure/)

## [Greeks Delta Gamma Theta](https://term.greeks.live/term/greeks-delta-gamma-theta/)

## [Arbitrage Strategy Cost](https://term.greeks.live/term/arbitrage-strategy-cost/)

## [Transaction Fee Bidding Strategy](https://term.greeks.live/term/transaction-fee-bidding-strategy/)

## [Delta Hedging Stress](https://term.greeks.live/term/delta-hedging-stress/)

## [Delta Hedging Manipulation](https://term.greeks.live/term/delta-hedging-manipulation/)

---

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---

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