What is 'Delta Hedging'
Delta hedging is an options strategy that aims to reduce (hedge) the risk associated with price movements in the underlying asset by offsetting long and short positions. For example, a long call position may be delta hedged by shorting the underlying stock. This strategy is based on the change in premium (price of option) caused by a change in the price of the underlying security. The change in premium for each basispoint change in price of the underlying is the delta and the relationship between the two movements is the hedge ratio.
BREAKING DOWN 'Delta Hedging'
For example, the price of a call option with a hedge ratio of 40 will rise 40% (of the stockprice move) if the price of the underlying stock increases. Typically, options with high hedge ratios are usually more profitable to buy rather than write since the greater the percentage movement  relative to the underlying's price and the corresponding little timevalue erosion  the greater the leverage. The opposite is true for options with a low hedge ratio.

DeltaGamma Hedging
An options hedging strategy that combines a delta hedge and a ... 
Gamma Hedging
An options hedging strategy designed to reduce or eliminate the ... 
Delta
The ratio comparing the change in the price of the underlying ... 
Hedge
Making an investment to reduce the risk of adverse price movements ... 
Cross Hedge
The act of hedging ones position by taking an offsetting position ... 
Selling Hedge
A hedging strategy with which the sale of futures contracts are ...

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What are the limitations of using delta to hedge options?
Learn about the delta of an option, how to delta hedge an option position and the limitations of using delta to hedge an ... Read Answer >> 
What industries typically use delta hedging techniques?
Learn what industries use delta hedging techniques for options trading, and understand how delta neutral trading strategies ... Read Answer >> 
What are common delta hedging strategies?
Learn about common delta hedging strategies, including how to make a position in options delta neutral by offsetting risk ... Read Answer >> 
How can you use delta to determine how to hedge options?
Learn what delta is, how to use delta to hedge options and how to maintain a deltaneutral position by deltahedging options ... Read Answer >> 
Is there a better metric for hedging options than delta?
Learn about delta and gamma hedging options, why gamma is a better metric to use to hedge and how gamma can be used with ... Read Answer >> 
Why does delta only range from 1 to 1?
Learn what the option Greek delta is, what affects the value of delta for an option and why the delta of an option can only ... Read Answer >>