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Stock option Delta


The stock option Delta is a greek that is designed to help you figure out the price an option should be trading at for every 1 point move in the stock price. For example if the Delta is .7 then for every dollar the stock moves up the option will move up $.7.






Call options will have a positive value and the puts have a negative value. That is because it indicates how much the option will move if the stock goes up. If this chart represented a 1 point down move the calls would be negative and the puts would be positive.

The delta gets bigger the farther in the money you go. The far out of the money options have a low Delta, while the options far in the money have a large delta. You can also estimate the price of the stock by figuring out where the the delta hits .5.


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