gm🫶🏽 i wrote this to clearly explain how delta neutral strategies actually work in practice.
markets need people on both sides of every trade. when everyone piles into one direction, the market literally pays you to take the other side. these payments are called funding rates and they keep the market balanced.
say everyone’s longing btc. the market pays people to short it. if everyone’s shorting, the market pays people to long it. this happens continuously, that’s just how market mechanisms work
delta neutral means you’re long and short at the same time. price goes up? your long gains cancel out your short losses. price drops? your short gains cancel out your long losses. zero directional exposure.
the market still pays you for balancing positions. since you’re both long and short, you’re always on whichever side is getting paid. funding rate positive? you collect on your short. funding rate negative? you collect on your long.
this is why @solsticefi hit 14.8% apy with 100% positive months for 3 years straight. the strategy doesn’t care what btc does. bull market, bear market, sideways - you’re just collecting funding payments for providing balance.
there are obviously other factors - risk management, position sizing, execution quality but the core yield source is simple: markets always have imbalances. funding rates always exist to correct them. delta neutral strategies always earn from that
that’s where the yield comes from. have a wonderful week y’all❤️
@AirtelNigeria
Airtel, please look into your Surulere office. The service there is terrible — always no router or NIN network down. I was there by 4 today, same story again. Something needs to be done.