Delta-Hedged Position
An option position combined with an offsetting position in the underlying sized to neutralize first-order directional exposure (delta). The simplest case: long one put with delta -0.4 plus long 0.4 shares of the underlying produces a position with zero delta. The hedge removes the directional bet but leaves the position fully exposed to gamma, theta, vega, and the higher-order Greeks -- which means a delta-hedged book is anything but a "neutral" position; it is a specific bet on volatility, time, and convexity.
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Related terms
American Option · Asian Option · Barrier Option · Basket Option · Butterfly Spread · Calendar Spread
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