How Do Market Makers Hedge Their Options Positions?

Market makers primarily use delta hedging, which involves buying or selling the underlying asset (stock, crypto, or future) to keep their overall portfolio's delta (price sensitivity) close to zero. This neutralizes the risk from small price movements in the underlying asset.

They constantly adjust their hedge as the underlying price changes (dynamic hedging) and use other Greeks like Gamma and Vega to manage more complex risks.