Options 101 Course

Take the Spot Test

The Greeks Part I

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Other points to remember

  • Delta neutral still requires you to manage the time decay.
  • Longer term options will generally have lower deltas to shorter term options.
  • Your position delta on your trade is also known as your "Hedge Ratio".
  • Delta is principally affected by time left to expiration and price of the underlying asset.
  • Some futures delta neutral trades can require no margin sometimes (and with certain brokers)
  • With calls, delta increases as the underlying asset price increases.  Call deltas are always positive.  Note that when you sell a call (naked) your position is delta negative.
  • With puts, delta decreases as the underlying asset price decreases.  Put deltas are always negative.  Note that when you sell a put (naked) your position is delta positive.

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