Traders consider an asset’s volatility carefully before buying any derivative. While they can take steps to control their exposure to market-based risks, the price of an underlying asset typically introduces elements of unpredictability into an investment position. For this and other reasons, many investors may build a delta neutral position.
In a delta neutral position a trader has made multiple investments whose cumulative delta values offset each other, leading to a net zero. The goal is to build a position such that you will not lose money regardless of how the underlying asset moves. There are two critical things to note about this process:
In a delta neutral position a trader has made multiple investments whose cumulative delta values offset each other, leading to a net zero. The goal is to build a position such that you will not lose money regardless of how the underlying asset moves. There are two critical things to note about this process:
0 Comments