Explain that Gamma hedging more precise
How is Gamma hedging more precise form of hedging that theoretically eliminates?
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Gamma hedging is a more precise form of hedging which theoretically eliminates these second-order effects. Classically, one hedges one, say, exotic, contract along with a vanilla contract and the underlying. The quantities of the vanilla and the underlying are selected so as to make both the portfolio delta and the portfolio gamma immediately zero.
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