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Hedging

Hedging is to limit as possible a stochastic drawdown of a P&L. Here are some ways to do that !

Hedging
HEDGING - CHAPTER I
Principles
Delta Hedging Principles
Delta hedging is a way to cover asset move exposure of a portfolio.
Gamma Hedging Principles
Gamma hedging is a way to hedge delta variations.
HEDGING - CHAPTER II
A first Attempt
Delta Hedging : A first Attempt
Option Price moves with the underlying. To hedge this risk, it's necessary to find a way in order to erase its correlation with that one.
Gamma hedging : A First Attempt
Delta hedging provides a way to hedge for small spot variations.
Delta Hedging
Delta Hedging is a very famous strategy to try to smooth the variation of the P&L of an option position.
Gamma hedging : example
An example of gamma hedging.

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