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Hedge Fund Trading Styles Overview

Why do we need to classify hedge funds into styles? Classifying hedge fund trading styles into groups is good for: Choosing the right funds to invest in. Some trading styles are entirely unsuitable for a particular investor’s risk and return objectives and by knowing the basic characteristics of hedge fund styles the investor can immediately … Read more


Option Portfolio Delta and Delta Hedging

Delta of a portfolio of options The main benefit of delta as a portfolio management tool is that it is additive across individual options – calls and puts, different strikes and different times to expiration. Of course, all options must be for the same underlying. You can easily calculate the total delta of your position … Read more


Measuring Directional Exposure with Delta

Delta: the king of the Greeks Delta, probably the best known of the option Greeks, measures an option’s directional exposure. Just by looking at delta, you can quickly tell whether an option or a portfolio of options will go up or down given a particular move in the underlying stock, and approximately by how much. … Read more


Delta of Calls vs. Puts and Probability of Expiring In the Money

What delta means Delta, the best known of the option Greeks, is a measure of directional exposure of an option. It is the first derivative of option’s market price with respect to the underlying’s price. Simply said, an option’s delta represents the dollar value by which the market price of the option changes when the … Read more


Calculating Moving Average from Close and the Other Methods

Topics: Trading Strategies > Technical Analysis      

The common method: using closing prices Most people calculate moving averages (or let their software calculate it) from the closing price of each bar. This has a valid reason on daily or weekly charts, because the price at which the market closes on a particular trading day or week has a big meaning. Of course, … Read more


The Most Important Parameter for Moving Averages

Topics: Trading Strategies > Technical Analysis      

What a moving average period means The length of a moving average period, or simply moving average period, means how many bars are used for calculating the moving average. When you are selecting a moving average period length, you are deciding how far back to the history you want to look. For example, a simple … Read more