Dynamic hedging

Dynamic hedging is a technique that is widely used by derivatives dealers to hedge gamma or vega exposures. Because it involves adjusting a hedge as the underlier moves-often several times a day-it is "dynamic.

Dynamic Hedging
Dynamic Hedging definition :
A strategy that involves rebalancing hedge positions as market conditions change; a strategy that seeks to insure the value of a portfolio using a synthetic put option.
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DYNAMIC HEDGING - A strategy that involves rebalancing hedge positions as market conditions change; a s...
DYNAMIC LINKED LANGUAGE - Refers to programming code that can be used ("called") by your main program w...

Dynamic Hedging
A technique by which a fund's exposure to a risky asset class, eg.

A dynamic hedging strategy using options that calls for constant adjustment of the number of options used, as a function of the delta of the option.

A dynamic hedging strategy using options with continuous adjustment of the number of options
used, as a function of the delta of the option.
Diversifiable risk
Related: unsystematic risk.

Rho is used in dynamic hedging strategies in order to hedge against the risk of interest rate changes. It is usually used in hedging bond portfolios as they usually heavily exposed to interest rate risk.
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Sometimes, this process is called dynamic hedging because it requires quick adjustments in the hedge. Initially, futures were used at various stop points to serve as synthetic put options.

Fooled by Randomness
The Black Swan
Dynamic Hedging - Managing vanilla and Exotic options
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A portfolio management technique whereby an investment manager aims to protect the capital value of a portfolio through risk management techniques, such as dynamic hedging.
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In contrast to dynamic hedging or delta hedging, which rely on a series of transactions in the underlying, forwards, or futures to match changing deltas, a delta-gamma hedge has an option payoff pattern built in.

See also: Delta, Delta hedge, Derivative instruments, Values, Sensitivity