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What is a delta-one position?

A delta-one position is a type of investment that moves almost exactly one-for-one with the price of an underlying asset.

“Delta” is a Greek term used in options trading to describe how much the price of an investment will change based on a $1 change in the underlying asset. 

  • A delta of 1 (or close to it) means that if the underlying goes up by $1, the investment also goes up by about $1. In other words, Delta-one. 

In the ARK DIET Buffer ETFs, the fund typically holds a delta-one position in its reference fund, ARKK – the ARK Innovation ETF. This gives the fund full exposure to the base performance of the ARK Innovation ETF. Then, using options, the fund modifies that exposure to: 

  • Reduce the downside (buffer) 
  • Delay and limit the upside (hurdle and participation rate) 
  • Produce a structured return path for the investor 

    In short, the delta-one position provides the core exposure, and the options overlay reshapes the return experience.