Template:Capsule delta-hedging: Difference between revisions

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Revision as of 14:25, 24 January 2020 (view source) Amwelladmin (talk \| contribs) (Created page with "In swap hedging, delta-hedging with a delta of one: that is, matching your hedge ''exactly'' to your swap obligation, and remaining market-neutral — or a...")		Revision as of 14:30, 24 January 2020 (view source) Amwelladmin (talk \| contribs) No edit summary Newer edit →
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	In [[swap]] [[hedging]]~~, [[delta-hedging]] with a [[delta]] of one: that is~~, matching your [[hedge]] ''exactly'' to your swap obligation, and remaining market-neutral — or as market neutral as you can. This is what [[prime broker]]s do when they trade [[synthetic equity swaps]]. They make their money not from trading equities, but by lending money to their clients, so their clients can trade equities.		In [[swap]] [[hedging]], matching your [[hedge]] ''exactly'' to your swap obligation, and remaining market-neutral — or as market neutral as you can. (strictly you could delta hedge with a delta other than one, I suppose, but most folks mean delta-''one'' hedging. This is what [[prime broker]]s do when they trade [[synthetic equity swaps]]. They make their money not from trading equities, but by lending money to their clients, so their clients can trade equities.

	===Example===		===Example===