Secret 58KEEP YOUR EYES ON THE DELTA
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The delta is one of the Greeks (ratios) generated by pricing
programs. The other Greeks are the gamma, theta, and vega. I
rarely use the other Greeks, although they are used in scanner
programs. To keep things simple, it is best to concentrate on the
delta and avoid getting lost in the statistics of the other Greeks.
The delta is a measure of how much bang you will get for
your buck if you are an option buyer. The delta tells you what
percent an option price will move if the underlying security or
futures moves 1 point.
For example, if the delta is .5, the option will move half a
point if the underlying instrument moves 1 point. The delta is a
good way to compare one option play to another; the higher the
delta, the better the play for the option buyer; the lower the delta,
the better the play for the option writer.
The delta is an excellent option analysis tool. Use it!
The delta is one of the Greeks (ratios) generated by pricing
programs. The other Greeks are the gamma, theta, and vega. I
rarely use the other Greeks, although they are used in scanner
programs. To keep things simple, it is best to concentrate on the
delta and avoid getting lost in the statistics of the other Greeks.
The delta is a measure of how much bang you will get for
your buck if you are an option buyer. The delta tells you what
percent an option price will move if the underlying security or
futures moves 1 point.
For example, if the delta is .5, the option will move half a
point if the underlying instrument moves 1 point. The delta is a
good way to compare one option play to another; the higher the
delta, the better the play for the option buyer; the lower the delta,
the better the play for the option writer.
The delta is an excellent option analysis tool. Use it!