What is 'Delta Neutral'
Delta neutral is 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.
BREAKING DOWN '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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How can you use delta to determine how to hedge options?
Learn what delta is, how to use delta to hedge options and how to maintain a deltaneutral position by deltahedging options ... Read Answer >> 
Why does delta only range from 1 to 1?
Learn what the option Greek delta is, what affects the value of delta for an option and why the delta of an option can only ... Read Answer >> 
What are common delta hedging strategies?
Learn about common delta hedging strategies, including how to make a position in options delta neutral by offsetting risk ... Read Answer >> 
What does it mean to say that a straddle is "delta neutral?"
Learn what the option Greek delta is and what makes a deltaneutral position, and see an example illustrating a deltaneutral ... Read Answer >> 
What are the limitations of using delta to hedge options?
Learn about the delta of an option, how to delta hedge an option position and the limitations of using delta to hedge an ... Read Answer >> 
What industries typically use delta hedging techniques?
Learn what industries use delta hedging techniques for options trading, and understand how delta neutral trading strategies ... Read Answer >>