How Does Delta-Gamma Hedging Differ from Simple Delta Hedging?

Simple Delta hedging aims for a zero net Delta to remove directional risk. Delta-Gamma hedging goes a step further by aiming for both a zero net Delta and a zero net Gamma.

By achieving Gamma neutrality, the portfolio's Delta remains stable even with large movements in the underlying price, reducing the need for frequent rebalancing and minimizing the associated transaction costs.