Glossary · Execution and risk
Delta-neutral
A delta-neutral, or market-neutral, position is one whose value barely changes when the price of the underlying asset moves a little, because long and short exposure offset each other. Equal notional long on one venue and short on another is the simplest form.
Neutral is not riskless. The legs can drift apart as prices move, funding and basis still change, and each leg carries its own margin and liquidation risk. Keeping a position neutral means rebalancing as it drifts.
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