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What Is ‘Delta-Neutral’ Hedging in the Context of Options Trading?

A strategy where the portfolio's net delta is zero, making its value insensitive to small price changes in the underlying asset.
Greeks.Live13.11.25

What Is ‘Delta-Neutral’ Hedging in the Context of Options Trading?

Delta-neutral hedging is a strategy aimed at structuring a portfolio of options and underlying assets so that the portfolio's overall value is insensitive to small changes in the underlying asset's price. The portfolio's delta is kept close to zero.

If the option position has a positive delta, the market maker sells the underlying asset, and vice-versa. This minimizes directional risk.

What Is a ‘Delta-Neutral’ Trading Strategy?
How Does a Delta-Neutral Strategy Protect a Trader’s Portfolio?
Why Must a Delta-Neutral Position Be Constantly Rebalanced (Delta-Hedging)?
Explain the Concept of “Delta Neutrality” and Why It Is a Constant Moving Target for an Options Market Maker

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