Shielding Profits in Uncertain Times: Delta Hedging Techniques

Delta Hedging: The Balancing Act of Risk Management

Delta measures how much an option’s price will change in response to a one-point movement in the underlying asset’s price. The article explains its significance in the investment world 

The year 2023 has emerged as a remarkable year in the world of contract trading, already breaking records in an unprecedented fashion. The surge in futures and options contracts has been nothing short of extraordinary, boasting a 130 per cent year-on-year growth for 2022-2023, following a noteworthy 125.2 per cent growth in the previous year.

This astonishing increase in trading activity, with a compound annual growth rate (CAGR) of over 70 per cent in the past five years, raises questions about the expanding presence of retail traders, their sometimes-vague trading practices, and the potential risks they take by neglecting essential concepts like delta hedging.