What Is a ‘Delta-Neutral’ Trading Strategy?
A Delta-neutral strategy is an options trading approach where the overall portfolio's Delta is maintained as close to zero as possible. This means the portfolio's value is theoretically immune to small price movements in the underlying asset.
Traders achieve this by balancing long and short positions in options and/or the underlying asset. The goal is not to profit from directional price movement but rather from changes in volatility (Vega) or time decay (Theta), or by capitalizing on Gamma scalping.
Glossar
Options Trading
Stewardship ⎊ Involves utilizing these contracts to manage exposure to assets whose underlying technology or governance may evolve, ensuring capital is not locked into potentially obsolete systems.
Time Decay
Erosion ⎊ ⎊ Time decay, within cryptocurrency options and financial derivatives, represents the systematic reduction in an instrument’s extrinsic value as its expiration approaches.