Since deltas change as stock values change, portfolio hedge ratios must be constantly updated in active markets. This process is referred to as
A) portfolio insurance.
B) rebalancing.
C) option elasticity.
D) gamma hedging.
E) dynamic hedging.

Question

Quizplus · Accepted Answer

Dynamic hedging involves continuously adjusting the hedge ratio as the underlying asset's price changes to maintain a desired level of risk exposure.

Since Deltas Change as Stock Values Change, Portfolio Hedge Ratios