Gap hedging is a trading strategy that involves hedging against price gaps that can occur in the market. Price gaps occur when there is a significant difference between the opening price of an asset and the closing price from the previous trading day. This can happen in response to unexpected news or events that occur outside of regular trading hours.

Gap hedging involves taking positions in both long and short positions in the market to hedge against the potential impact of price gaps. For example, if a trader holds a long position in a particular asset, they may also take a short position in the same asset to hedge against potential downward price gaps.

Gap hedging can be a useful strategy for traders looking to manage their risk in volatile markets, particularly for those who are holding positions overnight or over weekends when unexpected events can occur. However, it's important for traders to carefully monitor their positions and adjust their hedging strategies as needed to avoid potential losses.