Trade Nivesh Gain Delta

The real-world effect of taking a delta neutral position is that you neither lose nor gain money when a derivative’s underlying asset changes price. You have taken offsetting positions such that one set of investments gains value to offset any losses in the underlying asset’s price, and vice versa for any gains in this price.

You would like to build a delta neutral position out of this. You could do so by looking for short futures contracts, which measure their delta on a scale of 0 to -1. Say you found four contracts for 50 coffee beans with a delta of -0.5 each. The delta of each contract would be -0.5 x 50 = -25. The total delta of the four contracts together would be -25 x 4 = -100. Your position would now have offsetting delta values.