How Does Delta Hedging Differ from Static Hedging?
Delta hedging is a dynamic strategy that requires frequent adjustments to the hedge position to maintain a zero-Delta portfolio as the underlying price changes. Static hedging, conversely, involves establishing a fixed hedge position that is not adjusted over time.
Static hedging is simpler but less precise in neutralizing risk.
Glossar
Static Hedge
Framework ⎊ A static hedge, within cryptocurrency derivatives, represents a risk mitigation strategy predicated on establishing a fixed, predetermined relationship between an asset's price and a derivative instrument, typically an option.
Static Hedging
Technique ⎊ Static Hedging is a risk management technique where a derivative position is hedged using a fixed portfolio of other instruments, with the hedge composition remaining unchanged throughout the life of the derivative.