The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be talking about Beta neutral versus Delta neutral options trading portfolios. And I think this is really important because I think that a lot of people actually do not understand the difference between a Delta neutral portfolio and a Beta neutral portfolio. And while they sound very similar, there’s actually a big difference between the two. Let's start with a Delta neutral portfolio. When we look at a Delta neutral portfolio, what we’re talking about is we’re talking about the net Deltas of the underlying options positions that we’re trading. If we’ve got some iron butterflies and credit spreads and strangles, maybe naked options, basically just totaling up all of those Deltas and then trying to figure out – Okay. What are the total Deltas in my portfolio? Now, many times, people will say, “Oh. Well, I want to be Delta neutral which means that I want to have a portfolio that has an equal balance