# What Is the Relationship between Delta and the Need for Dynamic Hedging? ⎊ Path

**Published:** 2025-12-05
**Author:** Greeks.live
**Categories:** Path

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## What Is the Relationship between Delta and the Need for Dynamic Hedging?

Delta measures the sensitivity of an option’s price to a $1 change in the underlying asset’s price. To maintain a Delta-neutral position, a hedger must buy or sell the underlying asset in proportion to the portfolio’s net Delta.

Since Delta changes as the underlying price moves (due to Gamma), the hedger must constantly adjust their position. This continuous adjustment is known as dynamic hedging.

- [Define “Gamma” in Options Trading and Its Relationship to the Underlying Asset’s Price Change](https://learn.greeks.live/path/define-gamma-in-options-trading-and-its-relationship-to-the-underlying-assets-price-change/)

- [What Is the Primary Difference between a Static Hedge and a Dynamic Hedge?](https://learn.greeks.live/path/what-is-the-primary-difference-between-a-static-hedge-and-a-dynamic-hedge/)

- [How Does a Constant Sum Market Maker (X+y=k) Differ from a Constant Product AMM?](https://learn.greeks.live/path/how-does-a-constant-sum-market-maker-xyk-differ-from-a-constant-product-amm/)

- [What Is the Relationship between Gamma and Delta in an Options Portfolio?](https://learn.greeks.live/path/what-is-the-relationship-between-gamma-and-delta-in-an-options-portfolio/)

- [How Does the ‘Hedge Ratio’ Attempt to Create a Perfect Hedge?](https://learn.greeks.live/path/how-does-the-hedge-ratio-attempt-to-create-a-perfect-hedge/)

- [What Is ‘Gamma’ and Why Is It a Risk for Large Positions?](https://learn.greeks.live/path/what-is-gamma-and-why-is-it-a-risk-for-large-positions/)

- [Why Is a High Gamma Option More Difficult to Delta-Hedge than a Low Gamma Option?](https://learn.greeks.live/path/why-is-a-high-gamma-option-more-difficult-to-delta-hedge-than-a-low-gamma-option/)

- [How Does ‘Gamma’ Relate to the Concept of Slippage in Dynamic Options Hedging?](https://learn.greeks.live/path/how-does-gamma-relate-to-the-concept-of-slippage-in-dynamic-options-hedging/)

## Glossar

### [Dynamic Hedging](https://learn.greeks.live/area/dynamic-hedging/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Calibration ⎊ Dynamic hedging, within cryptocurrency and derivatives markets, represents a continuous rebalancing of a portfolio to maintain a desired risk exposure, typically delta neutrality for option positions.

## Discover More

### [How Does the Need for a Custodian Affect the Preference for Physically-Settled Contracts?](https://learn.greeks.live/path/how-does-the-need-for-a-custodian-affect-the-preference-for-physically-settled-contracts/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does the Need for a Custodian Affect the Preference for Physically-Settled Contracts?](https://learn.greeks.live/wp-content/uploads/2025/10/Teal-and-Ivory-Casing-Interface-Analyzing-Hinge-Mechanism-Securing-Digital-Asset-Custody-Structures.webp)

It adds operational complexity and cost; institutions with existing solutions may prefer physical, others opt for cash to avoid custody.

### [How Does 'Gamma' Affect the Frequency and Size of Delta Hedging Trades?](https://learn.greeks.live/path/how-does-gamma-affect-the-frequency-and-size-of-delta-hedging-trades/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does 'Gamma' Affect the Frequency and Size of Delta Hedging Trades?](https://learn.greeks.live/wp-content/uploads/2025/10/Conceptualizing-High-Frequency-Trading-Rotation-Mechanisms-in-Decentralized-Exchange-Liquidity-Provision.webp)

Gamma measures Delta's rate of change; high Gamma necessitates more frequent and larger hedging trades to maintain a delta-neutral position.

### [What Is the Term for the Relationship between an Option's Delta and Its Implied Volatility?](https://learn.greeks.live/path/what-is-the-term-for-the-relationship-between-an-options-delta-and-its-implied-volatility/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Term for the Relationship between an Option's Delta and Its Implied Volatility?](https://learn.greeks.live/wp-content/uploads/2025/10/Microcosm-of-Layered-Hardware-Interfacing-for-High-Frequency-Digital-Asset-Option-Pricing-Mechanics.webp)

The relationship between Delta and implied volatility is measured by the option Greek known as Vanna.

### [What Is the Relationship between Vanna and the Concept of "Sticky Delta"?](https://learn.greeks.live/path/what-is-the-relationship-between-vanna-and-the-concept-of-sticky-delta/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Relationship between Vanna and the Concept of "Sticky Delta"?](https://learn.greeks.live/wp-content/uploads/2025/10/Dynamic-Aperture-Mechanism-Visualizing-Open-Interest-Contract-Settlement-in-Decentralized-Exchanges.webp)

A low Vanna is consistent with the "sticky Delta" model, as it suggests Delta is less sensitive to changes in implied volatility.

### [How Can Dynamic Collateralization Ratios Improve Capital Efficiency?](https://learn.greeks.live/path/how-can-dynamic-collateralization-ratios-improve-capital-efficiency/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Can Dynamic Collateralization Ratios Improve Capital Efficiency?](https://learn.greeks.live/wp-content/uploads/2025/10/Futuristic-Digital-Asset-Volatility-Mechanism-Representing-Quantum-Derivatives-Execution-Strategies.webp)

By adjusting the required collateral level based on the underlying asset's volatility, allowing more stablecoin to be minted during low-risk periods.

### [What Is the Minimum Collateral an Attacker Would Need to Successfully Compromise a Decentralized Oracle Network?](https://learn.greeks.live/path/what-is-the-minimum-collateral-an-attacker-would-need-to-successfully-compromise-a-decentralized-oracle-network/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Minimum Collateral an Attacker Would Need to Successfully Compromise a Decentralized Oracle Network?](https://learn.greeks.live/wp-content/uploads/2025/10/Geometric-Abstraction-of-Balance-Sheet-Equilibrium-in-Decentralized-Finance-Derivatives-Settlement.webp)

More than 50% of the total staked value across all active oracle nodes to outvote the honest majority.

### [Does a Principal Trade Structure Eliminate the Need for an Escrow Service?](https://learn.greeks.live/path/does-a-principal-trade-structure-eliminate-the-need-for-an-escrow-service/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Does a Principal Trade Structure Eliminate the Need for an Escrow Service?](https://learn.greeks.live/wp-content/uploads/2025/10/Macro-View-of-Digital-Asset-Collateralization-Structure-and-Liquidity-Bubble-Dynamics.webp)

No, an independent custodian is often still used to ensure DVP and mitigate the desk's own counterparty risk.

### [How Does an Exchange's Dynamic Leverage System Adjust to Market Volatility?](https://learn.greeks.live/path/how-does-an-exchanges-dynamic-leverage-system-adjust-to-market-volatility/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does an Exchange's Dynamic Leverage System Adjust to Market Volatility?](https://learn.greeks.live/wp-content/uploads/2025/10/Bifurcated-Digital-Asset-Volatility-Surface-Modeling-Implied-Skew-Distribution-Dynamics.webp)

It automatically reduces the maximum allowable leverage for a contract as its price volatility increases, increasing the margin requirement.

### [What Criteria Define a "Suspicious Activity" That Triggers the Need for an SAR?](https://learn.greeks.live/path/what-criteria-define-a-suspicious-activity-that-triggers-the-need-for-an-sar/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Criteria Define a "Suspicious Activity" That Triggers the Need for an SAR?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Optics-on-a-Reflective-Surface-Modeling-Algorithmic-Hedging-Strategies-in-Digital-Asset-Markets.webp)

Suspicious activity lacks clear purpose or deviates from normal behavior, including structuring, multiple accounts, or high-risk jurisdiction transactions.

---

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