Guys, if anyone could please help me in this? Example: A dealer might sell a call option on gold, resulting in a negative gold delta of 5,200 ounces. To mitigate this exposure, he then purchases 5,200 ounces of gold spot. Together, the short option and long gold have a combined gold delta of zero. How is the dealer hedging his downside risk in the above example? As per my understanding-- If the price of the metal goes down, the call option that the dealer has shorted won’t be exercised by the holder, and the dealer who holds the gold shall have to bear the loss(as we are assuming that the price goes low). So how is the risk hedged in it?