Delta neutral
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What does it mean when "delta neutral" is mentioned in cryptocurrency finance?
What is delta neutral? Delta neutral is a portfolio strategy that utilizes multiple positions with balancing positive and negative deltas so the overall delta of the assets totals zero.[1]
In layman terms, delta neutral trading is the construction of positions that do not react to small changes in the price of the underlying stock. No matter if the underlying stock goes up or down, the position maintains it's value and neither increases nor decreases in price.[2]
What Is Delta? Delta (Δ) is a risk metric that estimates the change in price of a derivative, such as an options contract, given a $1 change in its underlying security.[3]