Unraveling the Magic of Delta Neutral Option Strategies
Delta neutral option strategies involve balancing the delta of an option with the underlying asset.
The delta of an option measures the sensitivity of its price to changes in the price of the underlying asset.
Delta neutral strategies can be used to hedge against market volatility and minimize risk.
One popular delta neutral strategy is the delta hedging strategy, which involves buying or selling the underlying asset to offset changes in the option's delta.
Straddle Delta Neutral You buy a call option and a put option with the same strike price and expiration date. The call option profits if the stock goes up, and the put option profits if it goes down.
Delta neutral strategies require careful monitoring and adjustment to maintain the desired balance.
Overall, delta neutral option strategies can be a powerful tool for managing risk and maximizing returns in the stock market.