of Credit Derivatives
Derivatives: Market Info and awareness
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A dynamic hedging device whereby
someone retains a risk by not fully hedging a position on a derivative(s),
but hedges oneself based on the delta, that is, the proportion in which a
unit change in the market price of the hedged item results into change in
market price of a hedging derivative. In the context of CDOs, delta
hedging device is often used for managing the retained risk in single
tranche synthetic CDOs.