--- title: "What is a delta neutral strategy or delta hedging?" description: "Delta neutral means the net delta of a position is close to zero, so a small move in the future changes its value very little." source_url: "https://www.rupeecase.com/learn/questions/delta-neutral-and-delta-hedging" --- A straddle has a near zero delta at the strike, and it gains on a large move either way Profit and loss for one lot of the at the money call and put bought at their 10 Jun 2026 settle prices, at expiry and with 10 days left, for the 30 Jun 2026 chain. Delta is near zero at the strike, not at every level of the future. Source: NSE end of day data, computed by RupeeCase. As of 10 Jun 2026. Delta is the rupee exposure to a small move in the future. A long future has a delta of one per unit, and an at the money call has a delta of about a half. When the total is close to zero, the position makes no directional bet for the moment. That is what delta neutral means. Delta hedging keeps the net delta near zero. If the index rises and the net delta turns positive, the hedge adds a short future, or a put, to bring it back. Each adjustment trades the underlying, and each trade carries a bid and ask spread and charges. The chart shows a straddle at the 10 Jun 2026 at the money strike, with ten days left. Its payoff bottoms out at the strike, where the delta is near zero, and it rises on both sides. The position is delta neutral at the start, and it gains on a move either way that is larger than the premium paid. It takes no view on direction, and it pays a premium for that shape, which theta takes away each day. Three things delta neutral does not remove. Gamma: the delta changes as the index moves, so the hedge has to be redone, and that is the gamma cost. Vega: a change in volatility moves the premium even when the delta is zero. Gap risk: a jump through the strike at the open leaves no time to adjust. Hedging shrinks the directional exposure, not the risk. The Greeks calculator shows the delta of one option per lot on a dated chain, which is the number a hedge is sized from. It is arithmetic, not a recommendation. **Before you trade.** Derivatives trading carries a high risk of loss. SEBI's study "Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26)" (August 2026) found that 87.7% of individual traders in equity F&O made net losses in FY26, with aggregate net losses of Rs 91,685 crore. [Read the SEBI study](https://www.sebi.gov.in/reports-and-statistics/research/aug-2026/study-profitability-of-individual-traders-in-the-equity-derivatives-segment-fy25-fy26-_103835.html) What is a delta neutral strategy or delta hedging?Delta neutral means the net delta of a position is close to zero, so a small move in the future changes its value very little, and delta hedging is the act of adding futures or other options to pull the net delta back toward zero as the market moves. It removes the directional exposure but not gamma, vega or the cost of hedging. LGo deeper ## Where Learn teaches this. [Go deeperPosition Greeks for multi leg strategies9 min, Intermediate](/learn/path-14/module-14-14-position-greeks)[Go deeperDelta: speed, hedge ratio and the probability shortcut8 min, Beginner](/learn/path-14/module-14-7-delta)[Try itGreeks calculatorDelta to rho, and vanna to colour in expert mode, from one Black 76 engine.](/learn/tools/greeks-calculator) SSources ## Go to the source. 3 sources, NISM the most cited The publisher of each source listed below. Source: Module undefined source list. 1. [NSE, equity derivatives contract specifications: European exercise, cash settlement and lot sizes](https://www.nseindia.com/static/products-services/equity-derivatives-contract-specifications) NSE 2. [SEBI, master circular on exchange traded derivatives (Dec 2024), chapter 5](https://www.sebi.gov.in/sebi_data/commondocs/dec-2024/RE_Chapter%205%20-%20Exchange%20Traded%20Derivatives%20FINAL_1_p.pdf) SEBI 3. [NISM, Series VIII equity derivatives test objectives](https://www.nism.ac.in/revamp-nism/test-objectives-revised-nism-series-viii-equity-derivatives-certification-examination/) NISM ?Questions people ask ## Related questions. 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