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Long term hedging perspectives: Delta hedging of USD/JPY straddles

It must be quite puzzling for the one who referred our earlier write up on USD/JPY on speculation grounds. If on a short straddle combination where a call and put options are written with delta's of 0.50 and -0.42 respectively how can this execution be delta hedged? The position is 1 of each written (underlying exchange price at 123.543 and ATM strike price at 123.543 with 7 days maturity).

Delta hedging anything is pretty much the same process. Compute the delta of the position and then have a position in the underlying currency with -1*delta of the derivative position. Then have arrangements for adjusting the hedge so that it moves with the delta of the derivative position.

There is a reason for doing this, but the person who has to ask how to do it doesn't know that reason. Write a straddle and you are short gamma and vega. You were delta hedging a position that is all about gamma and vega, all our bells and whistles would go off.

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