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Dynamic Hedging

   Also found in: Wikipedia 0.01 sec.
Dynamic hedging
A strategy that involves rebalancing hedge positions as market conditions change; a strategy that seeks to insure the value of a portfolio using a synthetic put option.

Dynamic Hedging
An investment strategy in which one reduces risk by taking various positions in put options according to changing market conditions. For example, one may buy a put to hedge risk to one security in a portfolio thought to be particularly risky at one time, and then sell that put and buy another when matters change.


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There is no dynamic hedging, and no creative asset/liability management is required.
The firms follow a dynamic hedging strategy in which they progressively adapt their hedged positions as interest rate levels change.
 
 
 
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