Beta-weighted delta, explained

If you own 100 shares of TSLA and 100 shares of KO, those positions do not respond the same way to a market move. TSLA might move 2x as much as SPY. KO might move 0.6x. Adding their deltas straight gives you a number with no useful meaning.

The fix

Beta-weighted delta multiplies each position's delta by its beta to SPY. The result is a delta expressed in SPY-equivalent terms. Now adding across positions tells you how much your portfolio moves with the market.

Raw delta tells you about positions. Beta-weighted delta tells you about portfolios.

What the number means

A beta-weighted delta of +500 means your portfolio acts like 500 shares of SPY. If SPY rises 1%, you gain roughly $500 × $1 of SPY movement. If SPY drops 1%, you lose the same amount.

The number does not capture single-stock risk (a TSLA earnings gap affects your TSLA position regardless of SPY). It captures market risk only. That is the right level of granularity for hedging decisions.

How to use it

• If your beta-weighted delta is much larger than you can stomach in a 5% SPY drop, hedge the market exposure.
• If you want to be market-neutral, use SPY puts or short SPY call spreads to drive beta-weighted delta toward zero.
• If you want directional exposure, use the number to size it precisely.

What to do next

Open the portfolio page. The Greeks summary shows beta-weighted delta. Read it as "equivalent SPY shares I am long or short right now." If the number surprises you, the hedge module can help you push it toward zero.