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  2. Delta neutral - Wikipedia

    en.wikipedia.org/wiki/Delta_neutral

    A related term, delta hedging, is the process of setting or keeping a portfolio as close to delta-neutral as possible. In practice, maintaining a zero delta is very complex because there are risks associated with re-hedging on large movements in the underlying stock's price, and research indicates portfolios tend to have lower cash flows if re ...

  3. Delta one - Wikipedia

    en.wikipedia.org/wiki/Delta_one

    A delta one product is a derivative with a linear, symmetric payoff profile. That is, a derivative that is not an option or a product with embedded options. Examples of delta one products are Exchange-traded funds, equity swaps, custom baskets, linear certificates, futures, forwards, exchange-traded notes, trackers, and Forward rate agreements ...

  4. Convertible arbitrage - Wikipedia

    en.wikipedia.org/wiki/Convertible_arbitrage

    As a result, under normal market conditions, the arbitrageur expects the combined position to be insensitive to small fluctuations in the price of the underlying stock. However, maintaining a market-neutral position may require rebalancing transactions, a process called dynamic delta hedging. This rebalancing adds to the return of convertible ...

  5. What Is Hedging? Here’s What Investors Should Know - AOL

    www.aol.com/finance/hedging-investors-know...

    Hedging is an investment strategy that is simple in concept but that can be difficult in execution. The primary uses of hedging strategies are to either lock in a profit or to protect against a...

  6. Volatility arbitrage - Wikipedia

    en.wikipedia.org/wiki/Volatility_arbitrage

    Over the holding period, the trader will realize a profit on the trade if the underlying's realized volatility is closer to his forecast than it is to the market's forecast (i.e. the implied volatility). The profit is extracted from the trade through the continuous re-hedging required to keep the portfolio delta-neutral.

  7. Market neutral - Wikipedia

    en.wikipedia.org/wiki/Market_neutral

    An investment strategy or portfolio is considered market-neutral if it seeks to avoid some form of market risk entirely, typically by hedging. To evaluate market neutrality requires specifying the risk to avoid. For example, convertible arbitrage attempts to fully hedge fluctuations in the price of the underlying common stock.

  8. 8 Hedging Strategies for a Potential Stock Market Correction

    www.aol.com/news/8-hedging-strategies-potential...

    The recent sell-offs in the stock market and lower bond yields could be indicators of a potential correction as many businesses struggle to stay afloat while the impact of the global pandemic lingers.

  9. Box spread - Wikipedia

    en.wikipedia.org/wiki/Box_spread

    The stock price S will disappear if we subtract one equation from the other, thus enabling one to exploit a violation of put/call parity without the need to invest in the underlying stock. The subtraction done one way corresponds to a long-box spread; done the other way it yields a short box-spread.