What is an example of delta one trading?

Equity swaps, another delta one product, involve the exchange of cash flows based on the performance of an underlying equity asset. These swaps offer investors exposure to equity markets without having to physically own the underlying shares.

Futures and forwards, too, fall under the umbrella of delta one products. They are derivative contracts that obligate parties to buy or sell an asset at a predetermined price and date in the future. The price of these contracts closely mirrors the expected future price of the underlying asset.

One of the defining characteristics of delta one products is their close delta value, which approaches one. This means that the change in the price of the product is nearly identical to the change in the price of its underlying asset.

"Delta one" products represent a category of financial instruments that exhibit a close correlation with their underlying assets. A prime example of such products is exchange-traded funds (ETFs), which are designed to track the performance of a specific index, commodity, or basket of assets.

As a result, delta one products are often seen as relatively low-risk investments compared to other, more complex financial instruments. Their simplicity and straightforward nature make them appealing to a wide range of investors, from retail traders to institutional investors.