Does a Delta-Neutral Position Have a Positive or Negative Theta? ▴ Learn

Does a Delta-Neutral Position Have a Positive or Negative Theta?

A typical delta-neutral position created by a market maker who is net short options (selling options to collect premium) will have a positive theta, meaning they profit as time passes. Conversely, a delta-neutral position created by being net long options will have a negative theta, meaning the position loses value as time passes due to time decay.

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