Dynamic hedging


Dynamic hedging

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.

Dynamic Hedging

An investment strategy in which one reduces risk by taking various positions in put options according to changing market conditions. For example, one may buy a put to hedge risk to one security in a portfolio thought to be particularly risky at one time, and then sell that put and buy another when matters change.