Delta is probably the first Greek an
option trader learns and is focused on. The ratio comparing the change in the
price of the underlying asset to the corresponding change in the price of a
derivative
In fact it can be a critical starting point when learning to trade options. A positive delta means the position will rise in value if the stock rises and drop in value of the stock declines. A negative delta means the opposite. The value of the position will rise if the stock declines and drop in value if the stock rises in price. Delta is one of four major risk measures used by option traders. Delta measures the degree to which an option is exposed to shifts in the price of the underlying asset. Delta tends to increase as you get closer to expiration for near or at-the-money options. Delta is not a constant
In fact it can be a critical starting point when learning to trade options. A positive delta means the position will rise in value if the stock rises and drop in value of the stock declines. A negative delta means the opposite. The value of the position will rise if the stock declines and drop in value if the stock rises in price. Delta is one of four major risk measures used by option traders. Delta measures the degree to which an option is exposed to shifts in the price of the underlying asset. Delta tends to increase as you get closer to expiration for near or at-the-money options. Delta is not a constant
Call
Options
Whenever you are long a call option,
your delta will always be a positive number between 0 and When the underlying
stock or futures contract increases in price, the value of your call option
will also increase by the call options delta value.
Put
Options
Put options have negative deltas, which
will range between -1 and 0. When the underlying market price increases the
value of your put option will decreases by the amount of the delta value.
Conversely, when the price of the underlying asset decreases, the value of the
put option will increase by the amount of the delta value.
