# How Can a Delta-Neutral Hedging Strategy Be Constructed Using Options to Mitigate Impermanent Loss? ⎊ Path

**Published:** 2025-12-05
**Author:** Greeks.live
**Categories:** Path

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## How Can a Delta-Neutral Hedging Strategy Be Constructed Using Options to Mitigate Impermanent Loss?

A delta-neutral strategy aims to have a portfolio value that does not change with small price movements of the underlying asset. To hedge impermanent loss, a liquidity provider can short a perpetual future or buy a put option on the more volatile asset in the pair.

The size of this hedge should be calculated to offset the expected loss from price divergence. This strategy requires active management, as the "delta" of the liquidity position changes with the asset's price, necessitating adjustments to the hedge.

- [How Can a Trader Hedge the Risk of an Existing Spot Position Using Crypto Futures?](https://learn.greeks.live/path/how-can-a-trader-hedge-the-risk-of-an-existing-spot-position-using-crypto-futures/)

- [What Is the Goal of a Delta-Neutral Options Strategy?](https://learn.greeks.live/path/what-is-the-goal-of-a-delta-neutral-options-strategy/)

- [Can Transaction Fees Fully Offset Impermanent Loss for a Liquidity Provider?](https://learn.greeks.live/path/can-transaction-fees-fully-offset-impermanent-loss-for-a-liquidity-provider/)

- [Provide an Example of a Simple Hedging Strategy Using Crypto Futures](https://learn.greeks.live/path/provide-an-example-of-a-simple-hedging-strategy-using-crypto-futures/)

- [How Can a Short Perpetual Futures Contract Be Used to Create a Delta-Neutral Position for a Liquidity Provider?](https://learn.greeks.live/path/how-can-a-short-perpetual-futures-contract-be-used-to-create-a-delta-neutral-position-for-a-liquidity-provider/)

- [How Can the Trading Fees Earned in a Pool Offset the Effects of Impermanent Loss?](https://learn.greeks.live/path/how-can-the-trading-fees-earned-in-a-pool-offset-the-effects-of-impermanent-loss/)

- [How Does a Market Maker Use Delta Hedging to Manage Inventory Risk?](https://learn.greeks.live/path/how-does-a-market-maker-use-delta-hedging-to-manage-inventory-risk/)

- [How Does a “Strip Hedge” Differ from a “Stack Hedge”?](https://learn.greeks.live/path/how-does-a-strip-hedge-differ-from-a-stack-hedge/)

## Glossar

### [Hedging Strategy](https://learn.greeks.live/area/hedging-strategy/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Strategy ⎊ A hedging strategy, within the context of cryptocurrency, options trading, and financial derivatives, represents a calculated approach to mitigate potential losses arising from adverse market movements.

## Discover More

### [How Can an LP's Earnings from Trading Fees Mitigate or Overcome Impermanent Loss?](https://learn.greeks.live/path/how-can-an-lps-earnings-from-trading-fees-mitigate-or-overcome-impermanent-loss/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Can an LP's Earnings from Trading Fees Mitigate or Overcome Impermanent Loss?](https://learn.greeks.live/wp-content/uploads/2025/10/Stochastic-Volatility-Equilibrium-Modeling-of-Decentralized-Finance-Option-Hedging-Instruments.webp)

High trading volume generates fees for the LP that can accumulate over time to outweigh the financial cost of impermanent loss.

### [Are There Specific AMM Designs Intended to Mitigate Impermanent Loss for Stablecoin Pairs?](https://learn.greeks.live/path/are-there-specific-amm-designs-intended-to-mitigate-impermanent-loss-for-stablecoin-pairs/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Are There Specific AMM Designs Intended to Mitigate Impermanent Loss for Stablecoin Pairs?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Exchange-Order-Book-Visualization-Reflecting-Volatility-Surface-Dynamics-in-Digital-Asset-Derivatives.webp)

Yes, designs like the stableswap curve use a hybrid invariant to provide low slippage and minimal loss near the pegged ratio.

### [How Do Single-Sided Staking Mechanisms Attempt to Mitigate Impermanent Loss?](https://learn.greeks.live/path/how-do-single-sided-staking-mechanisms-attempt-to-mitigate-impermanent-loss/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do Single-Sided Staking Mechanisms Attempt to Mitigate Impermanent Loss?](https://learn.greeks.live/wp-content/uploads/2025/10/Asymmetrical-Exposure-Quantification-in-Decentralized-Finance-Derivative-Pricing-Mechanism.webp)

Using insurance, vaults, or fee/token emissions to cover or hedge the IL for LPs.

### [How Does Delta-Gamma Hedging Differ from Simple Delta Hedging?](https://learn.greeks.live/path/how-does-delta-gamma-hedging-differ-from-simple-delta-hedging/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does Delta-Gamma Hedging Differ from Simple Delta Hedging?](https://learn.greeks.live/wp-content/uploads/2025/10/Layered-Stack-of-Cryptocurrency-Quant-Hedging-Volatility-Swap-Payoffs-Visualized-Through-Component-Isolations.webp)

Delta-Gamma hedging aims for zero net Delta and zero net Gamma, stabilizing Delta and reducing rebalancing costs.

### [How Can a Trader Use Cryptocurrency Options to Achieve a Vega-Neutral Strategy?](https://learn.greeks.live/path/how-can-a-trader-use-cryptocurrency-options-to-achieve-a-vega-neutral-strategy/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Can a Trader Use Cryptocurrency Options to Achieve a Vega-Neutral Strategy?](https://learn.greeks.live/wp-content/uploads/2025/10/Symmetrical-Quadrant-Divergence-Illustrating-Asymmetric-Payoff-Structure-in-Decentralized-Exchange-Liquidity-Provision.webp)

By using offsetting long and short option positions, such as ratio or calendar spreads, to balance the total Vega exposure to zero.

### [How Does a Vega-Neutral Portfolio Interact with Delta-Hedging?](https://learn.greeks.live/path/how-does-a-vega-neutral-portfolio-interact-with-delta-hedging/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does a Vega-Neutral Portfolio Interact with Delta-Hedging?](https://learn.greeks.live/wp-content/uploads/2025/10/Futuristic-Volatility-Surface-Modeling-for-Decentralized-Option-Vault-Structures.webp)

Vega-neutrality complements Delta-hedging by removing volatility risk, allowing for a pure Gamma/Theta play.

### [How Can a Pool with One Stablecoin and One Volatile Asset Mitigate Impermanent Loss?](https://learn.greeks.live/path/how-can-a-pool-with-one-stablecoin-and-one-volatile-asset-mitigate-impermanent-loss/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Can a Pool with One Stablecoin and One Volatile Asset Mitigate Impermanent Loss?](https://learn.greeks.live/wp-content/uploads/2025/10/Abstract-Visualization-of-Crypto-Derivatives-Spreads-Through-Overlaid-Momentum-Curves.webp)

It cannot eliminate IL, but the stablecoin acts as a fixed anchor, and specialized AMM curves concentrate liquidity near the peg to minimize price divergence.

### [How Does a Vega-Neutral Strategy Differ from a Delta-Neutral Strategy?](https://learn.greeks.live/path/how-does-a-vega-neutral-strategy-differ-from-a-delta-neutral-strategy/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does a Vega-Neutral Strategy Differ from a Delta-Neutral Strategy?](https://learn.greeks.live/wp-content/uploads/2025/10/Crystalized-Geometric-Fin-Structure-Piercing-Digital-Asset-Datum-Through-Black-Void.webp)

Vega-neutral hedges volatility risk (IV changes), while Delta-neutral hedges directional price risk (underlying asset movement).

### [What Is a 'Delta-Neutral' Strategy and Why Is It Used?](https://learn.greeks.live/path/what-is-a-delta-neutral-strategy-and-why-is-it-used/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is a 'Delta-Neutral' Strategy and Why Is It Used?](https://learn.greeks.live/wp-content/uploads/2025/10/Teal-Haptic-Interface-Modeling-Advanced-Cryptocurrency-Options-Hedging-Mechanism-Execution-Gate.webp)

A Delta-neutral strategy has a net Delta of zero, used to profit from Vega/Theta while minimizing directional price risk.

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**Original URL:** https://learn.greeks.live/learn/how-can-a-delta-neutral-hedging-strategy-be-constructed-using-options-to-mitigate-impermanent-loss/
