A hedge is an investment that is made with the intention of reducing the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting or opposite position in a related security.
Delta neutral is a portfolio strategy utilizing multiple positions with balancing positive and negative deltas so that the overall delta of the assets in question totals zero.
A delta-neutral portfolio evens out the response to market movements for a certain range to bring the net change of the position to zero. Delta measures how much an option’s price changes when the underlying security’s price changes.
As the values of the underlying assets change, the position of the Greeks will shift between being positive, negative and neutral. Investors who want to maintain delta neutrality must adjust their portfolio holdings accordingly. Options traders use delta-neutral strategies to profit either from implied volatility or from time decay of the options. Delta-neutral strategies are also used for hedging purposes.
The BISHOP fund in itself is the optimal hedging/delta neutral product available within Tranchess. Due to its delta neutral nature. Utilizing the BISHOP fund, whether it is nBISHOP+, bBISHOP or eBISHOP, will give you the opportunity to benefit from yield, all whilst remaining hedged and/or delta neutral.
BISHOP’s yield comes from the following sources: