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    • Why delta-neutrality?
    • Long and short concepts intro
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On this page
  • Decreasing uncertainty
  • The most valuable market
  • Other risks
  1. The delta-neutral paradigm

Why delta-neutrality?

Decreasing uncertainty

Delta is the greek (measure of risk), that shows, what's the earning of portfolio if there's a small change of underlying asset's price. So if delta of your position/portfolio allways equals 0, your earnings won't depend on direction and amount of price movement. Position with delta = 0 is called delta-neutral.

The most valuable market

Derivatives are financial assets, that isolate various types of risk. Derivatives occupy the major part of traditional finance ecosystem's trading volume because they allow building effective and predictable portfolios, thus making financtial markets more stable.

Other risks

Decreasing market risk doesn't mean that your money is totally safe: if you bear no risk of any type at all, you won't earn money. The delta-neutral position can have volatility risk, nonlinear price movement risk, credit risk, and as we're in crypto, regulatory, smart-contract risks and risks of the whole blockchain.

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Last updated 2 years ago