Delta Neutral Hedge is Insufficient

The speaker provides reasoning to why a delta-neutral hedge is not sufficient in mitigating risk.  A delta neutral portfolio is only delta neutral for a point in time.  The speaker provides a real trading example with the dollar/euro forex pair.  To create a delta neutral hedge, he shorts the Euro.  However, once the currencies start moving significantly in either direction, the hedge is insufficient.  In this case, delta will change and the hedge will not be delta neutral any longer; hence, requiring the porfolio to be rebalanced.  This is called dynamic delta hedging. 
Tim Ord
Ord Oracle

Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide...
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