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.

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The delta of a derivative security tells you the relationship between the underlying security's price and the security's ... Read Full Answer >> 
What does it mean to say that a straddle is "delta neutral?"
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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 >> 
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?
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