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Delta Neutral

The delta neutral function is used to adjust a position so that the effects of price movement of the underlying asset are minimized. This is easiest explained using the crab strategy: this strategy is profitable when the underlying asset moves a small amount and the funding received outweighs the losses from the price movement. The losses from the movement of the underlying will accelerate as the underlying price moves further from the price where the trade was opened, this means that if the underlying continues to move in one direction, the losses will increase and will outweigh the funding received.
Adjusting a position to delta neutral essentially takes the losses on the existing position and resets the position with a new opening price. Alternatively, looking at a long gamma position, using the delta neutral function will take profits. Keep following below to learn how to delta hedge an open position.

Delta hedging a position is simple to do in Predy, just navigate to the Positions page and follow the instructions below.
  1. 1.
    Select the strategy that you want to adjust to delta neutral.
  2. 2.
    Select Delta Neutral, Predy will then calculate the trade required to adjust the position to delta neutral.
  3. 3.
    (Optional) Enter an amount of collateral to add/remove.
  4. 4.
    Click Trade Now and confirm the trade in your wallet.
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Delta Hedging a Position