I've heard about the problem with the options drifting out of alignment. Pardon my ignorance, but what are variance swaps? I've never heard of these - are they liquid enough to trade?

<t>I was wondering if anyone had any insights regarding the optimal method of hedging deltas within a dispersion strategy. My first instinct would be to hedge on a daily basis, given that correlation data woudld be calculated off of daily returns. Or, maybe the best method would be to hedge long gam...