07-08-2002, 09:19 AM
In some of the various texts, it states that the hedge ratio and Delta are the same thing.
However, when the two are defined, it appears that the hedge ratio is dS/dF, while Delta is dF/dS
(F is the derivative value and S is the underlying value.)
Are the hedge ratio and Delta reciprocals or am I interpreting the definitions incorrectly?
However, when the two are defined, it appears that the hedge ratio is dS/dF, while Delta is dF/dS
(F is the derivative value and S is the underlying value.)
Are the hedge ratio and Delta reciprocals or am I interpreting the definitions incorrectly?