# Tag Info

Accepted

### Delta-Hedging Exotic Options

Consider reading Lorenzo Bergomi's excellent book -- or at least the first chapter available here for download --, it will help you clarify things. Some remarks as to your original question: It is ...
• 14.1k

• 7,301
Accepted

### Deriving Delta Hedge error in the B-S setup (part 2)

The paper could be clearer indeed. It is a slightly confusing topic, but the important step here is to understand the consequence of the derivative $C$ in the portfolio being priced at the assumed ...
• 1,346

### Options Delta Meaning of Term

It is true that when FX options are traded, the delta is often traded as well. That is a practice specific to the FX option market. It is called an "exchange of delta". You can undo it by selling the ...
• 9,167
Accepted

### Delta Hedging with a Different Underlying

I'd tackle this using some handwavery application of the bivariate conditional normal distribution to the geometric brownian motions: For a multivariate normally distributed random variable $X$, ...
• 5,903

### Delta of binary option

Delta of a digital (or binary) option is like the normal distribution probability function , approaching 0 at far OTM / ITM conditions and representing a very high peak at ATM. The peak at ATM ...
• 308

### Why/How does a hedged portfolio make profits?

An Investment Bank earns a profit by selling you an option at a slightly higher price than the theoretical price, or buying it back from you at a slightly lower price. They call this "earning a spread"...
• 9,167

### What is the effect of increasing volume depth to stock volatility?

Answers to your 3 questions: Empirically, there is no effect. I understand that this is not logical but it is reality. Adding thickness to an order book does not necessarily make it harder or easier ...
• 3,880