Delta-neutral

A delta-neutral position is one whose value doesn't move when the underlying asset's price moves by a small amount. Gains on one leg cancel another's losses. The construction is direction-blind by design: the sum of every position's delta, where delta is the rate at which a position's value changes with the underlying price, sums to zero across the book.

A common construction pairs long spot with an equivalent short in perpetual futures. Hold 10 BTC, short 10 BTC's worth of perps, and the directional P&L cancels. What's left is exposure to funding rates, the basis between spot and futures, and any structural spread the trader's trying to capture. Market makers, options desks, and crypto-collateral lenders all use it for the same reason: neutralize direction, earn the spread.

Delta-neutral hedges direction. The position still moves with implied volatility (vega), time decay (theta), and the curvature of options exposures (gamma). It also drifts as prices move because delta itself changes, so the hedge has to be rebalanced continuously rather than set once.

In Rekord's hedging layer, a delta-neutral hedge buffer runs perpetual-futures shorts against the aggregate pledged crypto book, absorbing the first part of any drawdown before option hedges and liquidation logic engage. See Delta-neutral hedging with perpetual futures and What is hedging? Options, puts, calls, and why lenders use them for full mechanics.