Re-hedging
Definition · Level 5 · Greeks & volatility
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Trading the underlying again to bring net delta back to zero after the stock’s move has changed it. A seller of options buys rallies and sells dips to do it; an owner of options does the opposite.
Example
Short 30 calls, hedged long 1,500 shares; the stock rallies, delta is −1,800: buy 300 more.
Where Tradecraft teaches it
Level 5 · Greeks & volatility, in the lesson “Delta hedging: staying flat”: How market makers cancel direction with stock, and why the hedge never stays right for long.
Related terms
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