Delta Hedging is an options trading strategy that aims to reduce, or hedge, the directional risk associated with price movements in the underlying asset. It is a way to reduce the risk of losing money, as well as a way to mitigate capital gains tax. Delta hedging can be done with options on virtually any asset class.For example, if you have a Delta hedge position in Apple, you own Apple shares and are also long stock options, which are trading at a certain premium to the shares. When the stock moves up, the options will increase in value at a faster pace than the stock, and vice versa. Delta hedging is a great way to protect your capital and give yourself a chance to earn significant income.In the past, investors have used options to hedge against directional risk. But hedging is not only about protecting an asset from a loss. It's about maximizing an individual's gain. By using options, investors can gain from price movements without the cost of holding the asset. This is called delta hedging and this blog will explore this strategy in more detail.
