How Is Delta Used by Traders for Hedging Purposes in a Crypto Portfolio? ▴ Learn

How Is Delta Used by Traders for Hedging Purposes in a Crypto Portfolio?

Traders use Delta to calculate the number of options contracts needed to create a "Delta-neutral" portfolio. A Delta-neutral portfolio is hedged against small price movements in the underlying crypto.

For example, to hedge a long position of 100 units of Bitcoin, a trader could sell two Call options with a Delta of 0.50 each (2 50 Delta 100 units/contract = 100 total Delta exposure).

What Is the Risk a Delta-Neutral Portfolio Still Faces?

How Does a Market Maker Manage the Risk of Gamma in a Delta-Hedged Portfolio?

How Often Must a Delta-Neutral Position Be Rebalanced (Re-Hedged)?

How Does ‘Delta’ Hedging Work for a Crypto Options Market Maker?