Options & derivatives
Delta
How much an option’s price moves for a $1 move in the underlying.
How it works
Delta runs from 0 to 1 for calls and 0 to −1 for puts. A delta of 0.5 means the option gains about 50 cents when the share gains a dollar.
It is also a rough estimate of the probability the option finishes in the money, and it tells you the equivalent share exposure a position carries.
Related terms
- GammaHow fast delta itself changes as the underlying moves.
- OptionA contract giving the right, but not the obligation, to buy or sell something at a set price by a set date.
- In the moneyWhether exercising an option now would produce a gain.
- HedgingTaking an offsetting position to reduce a specific risk you do not want.
More in Options & derivatives
- Derivative
- Covered call
- Expiry
- Contract for difference
- Futures contract
- Contango
- Cash-secured put
- Implied volatility
All 30 Options & derivatives terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.