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Yen taming dollar's upswings; Delta hedging of USD/JPY straddles

FX:USDJPY   U.S. Dollar / Japanese Yen
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Daily charts of USDJPY             suggest weakness as the leading oscillating indicators such as RSI (14) and Slow stochastic evidence overbought pressures as strength index curve converges falling prices.

%D crossover over above 80 levels on stochastic curves indicates selling pressures. And in addition back to back Gravestone doji candles appeared at 123.164 and 123.122 to signify further weakness in this pair.

If on a short straddle combination where a call and put options are written with delta's of 0.50 and -0.49 respectively how can this execution be delta hedged? The position is 1 of each written (underlying exchange price at 122.672 and ATM strike price at 122.675, 7 days maturity).

Delta hedging anything is pretty much the same process. Compute the delta of the position and then have a position in the underlying currency with -1*delta of the derivative position. Then have arrangements for adjusting the hedge so that it moves with the delta of the derivative position.

Write a straddle and you are short gamma and vega             . You were delta hedging a position that is all about gamma and vega             , all our bells and whistles would go off. There is a reason for doing this, but the person who has to ask how to do it doesn't know that reason.

This offers the Delta neutral position in our strategy. If our above technical view is correct, the strategy will profit via the short Call option with zero risk as the market moves around as long as you continue to update the Delta hedge.
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