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How do I hedge stock options like market makers do?
How do option market makers actually hedge their positions so that they do not have a price risk? You cannot complete hedge away price risk of a sold call simply by buying the underlying and waiting.  As the price of the underlying decreases, the "Delta" (price risk) decreases, so as the underlying decreases, you would gradually sell some of the underlying to reduce your price risk from the underlying to match the price risk of the option. The opposite is true as well - as the price of the underlying increases, you'd buy more of the underlying to maintain a "delta neutral" position. If you want to employ this strategy, first you need to fully understand what "delta" is and how to calculate it.  Then you can use delta hedging to reduce your price risk.