Delta Neutral
A position with total portfolio delta near zero, reducing directional exposure to small underlying moves.
Explanation
Delta-neutral portfolios are often built for volatility or theta trading rather than directional bets. Because delta changes as price moves (gamma), neutral portfolios require rebalancing. Traders use shares or offsetting options to maintain a target delta profile.
Example
A portfolio with +120 option delta can be hedged to neutral by shorting 120 shares of the underlying.