delta netural trading

[akigurulo]

have any of you used delta netural trading example --

owning 100 shares of stock , selling 2- 50 delta calls , then letting time expire .

[AlekseyPlupt]

How is that Delta neutral?

[Alealokato]

Sounds like you just described selling covered calls.

[AlexIvlew]

The term "Delta Neutral" refers to any strategy where the sum of your deltas is equal to zero. Calls have positive Delta and Puts have negative Delta.

A share of stock, by definition, has a delta of 1. If you own 100 shares of stock and sell 2 at-the-money calls that have a delta of .50 (i.e. 50 per contract), yes you've created a basic delta neutral trade. The problem is your trade won't remain delta neutral if the stock moves in either direction away from the strike price.