Change in option price per $1 move in the underlying — ranges 0 to 1 for calls, -1 to 0 for puts.
A 0.5 delta call gains $0.50 per $1 stock rise. Delta also approximates probability of finishing in-the-money. Deep ITM options have delta near 1; deep OTM near 0. Delta-hedged positions try to neutralize directional exposure.
Change in option price per $1 move in the underlying — ranges 0 to 1 for calls, -1 to 0 for puts. A 0.5 delta call gains $0.50 per $1 stock rise. Delta also approximates probability of finishing in-the-money. Deep ITM options have delta near 1; deep OTM near 0. Delta-hedged positions try to neutralize directional exposure.
In derivatives, Delta is one of the building blocks investors use to compare opportunities and assess risk. Understanding it helps you read research notes, earnings reports, and market commentary without getting lost in jargon.
A 0.5 delta call gains $0.50 per $1 stock rise. Delta also approximates probability of finishing in-the-money.
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