What is the Good Delta for Options?

Short Answer

Option delta is a segregation under Option Greeks. Option Greeks are used by option traders to decide what kinds of threats their positions are subject to and how many of them are there.

Detailed Answer

Meaning of Option delta:

Option delta is a metric that calculates how resistant an option's price (intrinsic value) is to shifts in the underlying's market value.

  • It is measured in terms of percentage.
  • It is one of the most important Option Greeks and is somewhat related to Gamma.
  • Delta can be both positive and Negative.
  • It will be from 0 to 1 for a call option* and -1 to 0 for a put option**.

*Call Option gives the right to the proprietor to buy the stock.

** Put Option gives the right to the proprietor to sell the stock.

  • The call option has this range because the primary asset will increase its price and so the price of call option will also increase.
  • The put option has this range because the security of the essential will increase, decreasing the price of put option.
  • Bullish strategies will have positive delta and Bearish strategies will have negative delta.
  • It is a major factor in the price structure used by option traders.
  • Delta overall serves various perks as it is universally adopted, is a price derivative and is also profitable of profits.
  • It is something which keeps fluctuating as it depends on factors such as maturity, unpredictability, and rates of interest.

Delta for options- Examples:

  • With some variables constant, if the Delta of a long-put option is negative 0.20 delta and the prime asset rises by $1, the option's price will decline by $0.20.
  • With some variables constant, if the Delta of a long-call option is 0.20 delta and the prime asset rises by $1, the option's price will surge by $0.20.
  • With some variables constant, if the Delta of a long-call option is 0.20 delta and the prime asset declines by $1, the option's price will also decline by $0.20.
  • With some variables constant, if the Delta of a long-put option is negative 0.20 delta and the prime asset reduces by $1, the option's price will surge by $0.20.


If we refer at a firm's ABC 1,425 call option that expires on the last Tuesday of March 2017, delta will demonstrate how the option price of this agreement shifts in relation to changes in ABC's spot price.

Tagged With: good deltadeltadelta for optionsoptions
Categories: Option Trading
Comments (0)
Related FAQs

Is Sensibull Pro Worth it? How good is the Options Trading Platform?

Sensibull Pro is a package offered by the company in terms of options trading. Features such as a statistical tool, strategy implementation advice, custom strategy build, IV charts, currency options, and more make it unique and different from the other plans. If you're serious about trading in options and are looking for a concrete structure in trading in options, then the pro package of Sensibull makes complete sense.

What is Call Option and Put Option?

Options are a form of conditional derivatives policy that allows the holder to buy or sell the key asset at a fixed price before or after the agreement expires. The two most impactful options are Call Options and Put Options.

Is Wisdom Capital Good, Safe & Reliable Broker for Stock Trading and Investing?

Yes, Wisdom Capital is good, safe, and reliable for all stock trading and investing options. However, weighing in on the lack of trading options and the unjustified charges imposed, it is a cause of worry. But other than this, the broker is reliable enough to execute a trade from the platform.

What is Uncovered or Naked Options Trading?

Naked or Uncovered Option trading is a type of trading/speculating where a Call or Put option is bought or sold by different individuals at the same time expecting different price direction movements. Naked Option trading is a Zero-Sum game which means that the Profit for one is a Loss for the other individual.

What is an Option Spread? Meaning, Types & Examples

Option Spreads are usually used to hedge a position and try to increase the chances to make money. By doing this we limit our profits but most importantly we minimize our losses that is the most important part in trading, which is to preserve our capital.

What is a Collar option Strategy? When to use it?

A collar option strategy is a multi-leg option strategy that involves an existing long position in any security in the Equity or Futures market and buying an OTM (Out Of the Money) Put option and selling an OTM Call option in order to hedge the existing long position from any short term bearishness. The overall Profit and loss are capped in this strategy and this strategy is implemented when the overall outlook of the underlying asset is bearish.

What is the Best strategy for Options Trading?

There are many complex Option Trading strategies out there but the most profitable are some of the simpler ones. The top 3 of them are Long & Short Straddles, Long & Short Strangles and Bull/Bear spreads.

Where to invest money for good returns in India? High Return Investments

We all look to earn good returns on the money we invest. Putting money in High return investments is one way of generating better income. The different places to get good returns are mutual funds, equity, and gold investment in India.

What is a good Rate of Return on investments (ROI)?

A good return on investment is where a person makes considerable profits form their investments after a long period. However, the profits can vary form one person to another.

Is Sensibull free option trading platform?

Sensibull is not a complete free website for option trading but it does offer some free features and also a 7 day free trail. For more details read through the expanded version.