> ## Documentation Index
> Fetch the complete documentation index at: https://docs.b1nary.app/llms.txt
> Use this file to discover all available pages before exploring further.

# Hedging

> Delta hedging with perpetual futures.

b1nary handles the options side (quotes, settlement, collateral). Hedging is your responsibility. The protocol gives you the data you need. Where and how you hedge is up to you.

## What b1nary gives you

* **Delta** per option: from `GET /mm/market` you get spot price and IV. Compute delta using Black-Scholes.
* **Real-time fills** via WebSocket (`WS /mm/stream`): the moment a user fills your quote, you know the exact amount.
* **Position summary** via `GET /mm/positions` and `GET /mm/exposure`: your current open risk at a glance.

## How to hedge

When you receive a fill, compute the delta and open a hedge position on an external venue.

**For puts:** delta is negative, so you **short** the underlying.

**For calls:** delta is positive, so you **long** the underlying.

**Hedge size** = `|delta| * number_of_options_in_ETH`

### On fill (Hyperliquid example)

```python theme={null}
from hyperliquid.exchange import Exchange

# On each fill:
amount_eth = int(fill["amount"]) / 1e8  # oToken has 8 decimals
delta = bs_delta(is_put, spot, strike, T, r, iv)
hedge_size = abs(delta) * amount_eth

# For puts: short ETH. For calls: long ETH.
is_buy = not is_put
exchange.market_open(
    "ETH", is_buy, round(hedge_size, 4), slippage=0.05
)
```

### Continuous rebalance

Every cycle (e.g., 60 seconds), recalculate delta with updated spot and IV. If delta changes by more than 0.02, adjust hedge size.

### At expiry

Close the hedge. If OTM, the hedge should have roughly broken even. If ITM, the hedge profited in the same direction as the option's intrinsic value.

## Alternative hedge venues

You can hedge anywhere with ETH perpetual futures or spot:

* Hyperliquid (our reference implementation)
* Binance, Bybit, OKX, dYdX
* On-chain perps (GMX, Kwenta)
* Spot: buy/sell ETH directly

The only requirement is speed. Your hedge venue must be fast enough to react to fills.

## No hedge (directional mode)

If you have an informational edge on ETH direction, you can skip hedging entirely. You make a directional bet with the added advantage of earning the spread. Higher risk, valid for agents with strong price prediction models.

## P\&L tracking

Track per-position:

* Premium paid (from fill data: `gross_premium`)
* Hedge entry price and size
* Hedge exit price (when closed at expiry or rebalanced)
* Settlement outcome (OTM = \$0, ITM = intrinsic value)
* Net P\&L = `-premium + settlement + hedge_pnl`

And portfolio-level:

* Total premium paid across all positions
* Net delta exposure (sum of `delta * amount` across open positions)
* Cumulative realized P\&L from closed positions