DEFINITION of 'Delta Hedging'
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.
INVESTOPEDIA EXPLAINS '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.

Charm
The rate at which the delta of an option or warrant will change ... 
Delta Spread
An options trading strategy where the trader initially establishes ... 
Super Hedging
A strategy that hedges positions with a selffinancing trading ... 
Theta
A measure of the rate of decline in the value of an option due ... 
Time Decay
The ratio of the change in an option's price to the decrease ... 
Delta
The ratio comparing the change in the price of the underlying ...

Options & Futures
Getting To Know The "Greeks"
Understanding price influences on options positions requires learning about delta, theta, vega and gamma. 
Options & Futures
Capturing Profits With PositionDelta Neutral Trading
This trading strategy will show you how to gain from a decline in implied volatility on any movement of the underlying. 
Options & Futures
Options Trading Strategies: Understanding Position Delta
Learn more about the position delta hedge ratio and how it can tell you the number of contracts needed to hedge a position in the underlying asset. 
Options & Futures
What are the differences between divergence and convergence?
Find out what technical analysts mean when they talk about a market experiencing divergence or convergence and how they affect trading strategies. 
Options & Futures
What are the most common momentum oscillators used in options trading?
Read about some of the most common technical momentum oscillators that options traders use, and learn why momentum is a critical concept for options trading. 
Options & Futures
Futures Quotes Explained The "Easy" Way
If there’s a security whose price fluctuates, there can theoretically be a futures marketplace for it. 
Trading Strategies
Is the Stock Correlation Strategy Effective?
The synchronized movement among stocks and markets in recent years is challenging diversification. 
Options & Futures
How are Bollinger Bands® used in options trading?
Use Bollinger Bands to identify volatility changes and place options trades at the right time; profit in bull or bear markets using these strategies. 
Options & Futures
Why is the Accumulative Swing Index helpful for traders and/or investors?
Find out why J. Welles Wilder believed that the accumulative swing index could be used in the futures markets to indicate longterm trends. 
Options & Futures
Stock Futures vs Stock Options
A full analysis of when is it better to trade stock futures vs when is it better to trade options on a particular stock. A quick overview of how each of them works and why would a trader, investor, ...