Thanks in advance. How would I form an EXACT perfect hedge on an out of the money call option? eg: Long 20 SPY FEB 122 Puts at 6.94 with - 40 delta, would that mean I should take an EQUAL dollar amount on the SPY FEB 122 Calls ? or should i take EQUAL dollar amount with the FEB 129 CALLS at the idential inverted 40 delta? the purpose is to go into the next few days totally hedged for the purpose of unloading the calls at highs and puts at the lows. that part i can handle. thanks!

Your post is confusing. The first sentence asks about a call, but then in the example you mention a long put. A perfect hedge is to close out the position. If you are long 122 puts then a perfect hedge would be a short synthetic put, which consists of a long stock and a short 122 call.

thanks guys, i know its confusing. but i just want to hedge my long put with an equal long call. should i find the delta neutral version of the put in a call and then buy the same $$ amount in the call as spent on the put?

I have already answered this question. If you are long 20 Feb 122 puts then to hedge them you would buy 2000 shares of SPY and at the same time sell 20 Feb 122 calls. The resulting position is a "perfect" hedge.

thank you. would there be a way to hedge just on the call side, assuming you dont buy the underlying equity nor have the ability to sell naked calls. tx

yes you count your delta's and do whatever it takes to become neutral. but it ain't gonna stay that way. if you're a mean-reversion trader then maybe that's OK

If you buy the underlying and sell the calls then the calls are not naked. You can just buy the calls to hedge the delta, but you would still be exposed to changes in implied volatility and time decay, not to mention that you would be delta-hedged only over relatively small moves since as the underlying moves so will the deltas of the puts and calls change and hence you will no longer be hedged. You can use any calls to hedge the long puts. All you have to do is match up the total delta. For example, you have 20 long puts with a delta of -0.6. This means that your total delta -12. You can use any calls to hedge this number. If you use calls with a delta of 0.4 then you would need to buy 30 of them. If you use calls with a delta of 0.6 then you only need 20...