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What Is the Difference between Static and Dynamic Delta Hedging?

Static delta hedging involves setting up a hedge at the time the option position is opened and holding it until expiration, without adjustment. This is only effective for positions with very low Gamma.

Dynamic delta hedging involves continuously adjusting the hedge by buying or selling the underlying asset as its price changes. Dynamic hedging is more accurate for volatile markets and higher Gamma options but incurs higher transaction costs.

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