What is a hedge ratio in options?

A hedge ratio is the number of option contracts or shares needed to offset the delta risk of a position. For example, if you own 100 shares (delta +100) and want to be delta neutral, you need options with combined delta of -100. This might be 2 ATM puts at -50 delta each, or 1 deep ITM put at -100 delta. The hedge ratio changes as the underlying price moves due to gamma.

How do you calculate hedge ratio?

Hedge ratio = Position Delta / Contract Delta. Example: You own 500 shares (position delta = +500). ATM puts have delta of -0.50 (or -50 per contract). Hedge ratio = 500 / 50 = 10 puts needed for full hedge. For partial hedge (50% protection), use 5 puts. The calculator shows exact hedge sizes for any position based on real-time Greeks.

Hedge Ratio Calculator

Calculate the exact hedge ratio to protect your portfolio. Determine how many shares, puts, or calls needed to achieve delta neutral positions or partial hedges.

Delta Hedging

Risk Management

Advanced Greeks

Last Updated: November 21, 2025

8 min read

Reviewed by: ApexVol Trading Team

Fact-checked & Up-to-date

What is Hedge Ratio Calculator?

Hedge Ratio Calculator is a tool that calculates how many shares or option contracts are needed to offset the directional risk (delta) of an existing position, creating a neutral or hedged portfolio.

Hedge ratios are essential for market makers and professional traders managing portfolio risk. Adjusting hedges as delta changes (gamma scalping) can generate profits from volatility.

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