Delta Neutrality I
Fellow DeFi Enthusiasts,
We hope this week’s DeFi Digest finds you well. Evidently, these market (weather) conditions have shown to be inconducive to the strategies (crops) we’ve cultivated throughout the last 18 months.
Like farmers adapting to changing seasons, we humble (yield) farmers need to pay close attention to our crops, leaning into robust strategies (crop species) that can weather the ongoing storm (bear market).
Delta Δδ
One class of strategies that may prove effective in the current market climate is delta-neutral strategies. Delta is defined as the change in the price of a financial instrument relative to the change in price of its underlying asset.
Followingly, delta-neutrality is to be flat (zero or close to zero) on delta, causing negligible changes in P&L regardless of whether market moves up or down. This concept is not foreign to traditional finance, as illustrated in the strategies below:
I. Arbitrage
Arbitrage is the simultaneous buying and selling of the same asset in different spot or derivative markets to profit from the price...Reports you may have missed
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