Market makers buy and sell just like anyone else with different products. Obviously buying low selling high is the goal. This process is selected and done by demand and supply of the instrument or product not by personal interest. One way that market makers in the derivatives market that they can control this risk is by Delta Hedging. The market maker calculates the purchase of the option delta and takes an offsetting position. This delta-hedged strategy is commonly used in the markets especially these days. That investor usually invests own capital to do this. The Black-Scholes model is a key part of this. Discuss and one of the following. Please include a real world example.

1. Provide your thoughts and opinion on delta-hedging list one strength and one weakness and why?
2. What actions are required to both delta-hedge and gamma-hedge a written option position?