Delta-Neutral
A delta-neutral position is a portfolio constructed so that the total delta (sensitivity to the underlying asset's price movement) is zero. In crypto, common delta-neutral strategies include: the basis trade (long spot, short futures), funding rate arbitrage (long spot, short perpetual with positive funding), and options market-making (dynamically hedging option delta with spot or futures trades). The goal is to earn yield from funding rates, basis convergence, or option theta decay without directional exposure to the underlying crypto asset's price. The main risk is that delta neutrality can break down quickly — during high volatility, hedge rebalancing may be too slow, leading to unanticipated directional exposure. Plus, many supposedly delta-neutral strategies have hidden risk factors: funding rate strategies are exposed to funding rate regime shifts; basis trades face futures-spot convergence failure; options hedging faces gamma risk when the underlying moves faster than the hedger can rebalance.