Options Jive

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Uses of Delta

Options Jive

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Delta represents the change in the option value when the underlying moves up by $1.

For example, an option with a delta of 50 would move by $0.50 when the stock moves up by $1. Similarly, an option with a delta of -50 would lose $0.50 in value when the underlying moves up $1.

Delta can tell us how many shares we are synthetically long or short. For example, an option with 25 delta is the same directional position as being long 25 shares of the underlying.

Tune in as Tom and Tony walk through this greek and why it's such a large component of options trading.

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