Skip to main content

How Is Delta Used by Options Traders to Manage Risk?

Delta represents the expected change in an option's price for a $1 change in the underlying asset's price. Traders use Delta to hedge their positions, aiming for a "Delta-neutral" portfolio where the total Delta is zero.

This zero-Delta state means the portfolio's value is initially insensitive to small movements in the underlying price.

What Greek Letter Measures the Sensitivity of the Option Price to the Underlying Price?
How Do Traders Use Volatility (The “greeks” Vega) to Manage Their Options Positions?
Is a Delta-Neutral Position Also Gamma-Neutral?
How Does the Concept of “Delta” in Options Trading Measure the Derivative’s Sensitivity to the Underlying Asset Price?