Delta Neutral
Definition of 'Delta Neutral'A portfolio consisting of positions with offsetting positive and negative deltas so that the position of delta is zero. A delta neutral portfolio balances out the response to market movements for a certain range to bring the net change of the position to zero. Delta measures how much an option's price changes when the underlying security's price changes. |
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Investopedia explains 'Delta Neutral'As the value of the underlying assets changes, the position of the Greeks will shift between being positive, negative and neutral. Investors who want to maintain delta neutrality must adjust his or her holdings accordingly. Puts always have a negative delta (ranging from -100 to zero), while long calls always have a positive delta (ranging from zero to 100), so the two can be used together to create a delta neutral position. Options traders can use a neutral position delta strategy to make money when implied volatility declines. |
Directory (Option Strategy)
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Alligator Spread
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Buy A Spread
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Collar
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Contingent Order
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Credit Spread
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Death Put
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Debit Spread
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Delta Hedging
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Delta Neutral
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Delta Spread
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Double One-Touch Option
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Fixed Dollar Value Collar
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FMAN
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Form 6781: Gains And Losses From Section ...
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Front Fee
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Implied Volatility - IV
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Interest Rate Collar
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Leg
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Leg Out
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Long-Term Equity Anticipation Securities ...
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Modidor
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Protective Put
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Put Calendar
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Put On A Call
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Put On A Put
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Put Ratio Backspread
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Put To Seller
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Ratio Call Write
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Ratio Spread
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Roll Down
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Seagull Option
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Sell To Open
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Series 4
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Short Leg
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Straddle
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Swing Option
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Variable Ratio Write
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VIX Option
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Writing An Option
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Zero Cost Collar
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Zomma
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