DEFINITION of 'Delta Neutral'
A portfolio consisting of positions with offsetting positive and negative deltas so that the position of delta is zero. A deltaneutral portfolio balances 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.
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 their holdings accordingly. Puts always have a negative delta (ranging from 1 to 0), while long calls always have a positive delta (ranging from 0 to 1), so the two can be used together to create a deltaneutral position. Options traders can use a neutral position delta strategy to make money when implied volatility declines.

Volatility Arbitrage
Trading strategies that attempt to exploit differences between ... 
Delta Spread
An options trading strategy where the trader initially establishes ... 
Delta
The ratio comparing the change in the price of the underlying ... 
Gamma
The rate of change for delta with respect to the underlying asset's ... 
Delta Hedging
An options strategy that aims to reduce (hedge) the risk associated ... 
Greeks
Dimensions of risk involved in taking a position in an option ...

What is the difference between a straddle and a strangle?
A straddle is an option strategy that consists of buying (or selling) an atthemoney call option and simultaneously buying ... Read Full Answer >> 
What does it mean to say that a straddle is "delta neutral?"
The option Greek delta measures how much an option moves in relation to the changes in an underlying stock price. It's the ... Read Full Answer >> 
How do I use Weighted Alpha to create a forex trading strategy?
In foreign exchange or conventional security markets, weighted alpha is designed to help discriminate between different instruments ... Read Full Answer >> 
What is a common strategy traders implement when using the Weighted Alpha?
A trader can use weighted alpha to measure a stock's price action over a certain time frame, usually measuring growth over ... Read Full Answer >> 
How can I use alpha in conjunction with the Treynor Ratio?
Alpha and the Treynor ratio are two technical indicators widely used in risk management to assess the effectiveness of investment ... Read Full Answer >> 
Does a negative alpha automatically mean I should sell?
Investors and analysts use numerous technical indicators to assess the relative risk associated with a given stock. Optimal ... Read Full Answer >> 
Is alpha the best risk measure?
There are many different types of risk associated with investing, and it is almost impossible for any single technical indicator ... Read Full Answer >>

Options & Futures
An Introduction To GammaDelta Neutral Option Spreads
Find the middle ground between conservative and highrisk option strategies. 
Options & Futures
Getting To Know The "Greeks"
Understanding price influences on options positions requires learning about delta, theta, vega and gamma. 
Options & Futures
Capturing Profits With PositionDelta Neutral Trading
This trading strategy will show you how to gain from a decline in implied volatility on any movement of the underlying. 
Options & Futures
Options Trading Strategies: Understanding Position Delta
Learn more about the position delta hedge ratio and how it can tell you the number of contracts needed to hedge a position in the underlying asset. 
Options & Futures
Option Spread Strategies
Learn why option spreads offer trading opportunities with limited risk and greater versatility. 
Options & Futures
Trading Volatility? Don’t Trade Stocks, Trade Options
During times of volatility, traders can benefit greatly from trading options rather than stocks. We explain why. 
Bonds & Fixed Income
How to Diversify with Muni Bond ETFs
Thinking of diversifying with bonds? Consider these muni bond ETFs. 
Mutual Funds & ETFs
How To Build A Bond Ladder?
Bond laddering is a strategy used when building a portfolio: an investor can spread out interest rate risk and create a stream of cash flows for income. 
Fundamental Analysis
How Investment Risk Is Quantified
FInancial advisors and wealth management firms use a variety of tools based in Modern portfolio theory to quantify investment risk. 
Investing
Rethinking About Retirement Investing?
There are plenty of reasons to rethink your retirement investing, wherever you fall on the spectrum between fatalistic acceptance and cheerful confidence.