This article was originally published in The Option Strategist Newsletter Volume 12, No. 8 on April 24, 2003.
The concept of “delta neutral” is an intriguing one – especially to traders who have had a hard time predicting the market or to those who don’t believe the market can be predicted (random walkers). The concept is even sometimes “sold” to novice investors as a sort of “can’t-lose” trading method, even though that isn’t true at all. While the idea of having a position that can make money without predicting the direction of the underlying stock seems attractive, in practice the strategy is difficult, if not impossible, to apply – at least in terms of keeping a position delta neutral.
This article was originally published in The Option Strategist Newsletter Volume 1, No. 2 on January 9, 1992.
All strategy recommendations made by "The Option Strategist" have a graph accompanying them that displays the delta of the entire position. Moreover, this graph also displays how the delta of the position is expected to change as the stock moves up or down in price. This article describes the position delta and how to best use it, especially for follow-up action.
This article was originally published in The Option Strategist Newsletter Volume 8, No. 16 on August 26, 1999.
Questions & Answers
Q: I would like to ask you about delta neutral trading which I have heard and read about. Could you give me a brief description, it's merits and drawbacks, and in what situations it is best used. K.T. 6/17/99
This article was originally published in The Option Strategist Newsletter Volume 6, No. 3 on February 6, 1997.
At the Futures South Conference last month, there was a lot of talk about delta neutral strategies. We're going to take a look at what these strategies are, and why they're not as profitable and easy to operate as some advisors would have you believe. I have mentioned in the past that I have some trepidation that too many traders are embarking on delta neutral strategies without understanding that — like any other strategy — they involve work to operate profitably.
