STRATEGIES
Delta Neutral (Delta Neutral Strategy)
Definition
A delta neutral strategy aims to eliminate directional price risk by balancing long and short positions so that the portfolio's value doesn't change with small price movements in the underlying asset.
Example
Example
Providing ETH/USDC liquidity while shorting ETH with perpetual futures to hedge against ETH price movements, earning fees while minimizing price exposure.
Risks to Consider
Risks
- Imperfect hedging
- Funding costs
- Rebalancing needs
- Basis risk
