What is Delta?

01:28 Mins Read

Learn about an important variable Delta, and how it is used in the pricing model by vendors.

Transcript

"What is delta? The natural demand-supply situation of the markets influence each other. All the factors work independently, and yet have the capability to influence each other. Before we jump into nitty gritties, let’s recap a few important basics for this module, shall we? 

Options: Contracts that give the right to buy or sell an amount of an underlying asset at a predetermined price before the contract expires.
Call Option: This gives the holder the right to buy a stock 
Put Option: This gives the holder the right to sell a stock. Successful traders understand the factors that influence options pricing, which include the so-called ""Greeks"" —a set of risk measures so named after the Greek letters that denote them, which indicate how sensitive an option is to time-value decay, changes in implied volatility, and movements in the price its underlying security. It is a number ranging between 0 and 1 that compares the change in the price of an asset to the change in the price of its derivative. Delta is an important variable related to the pricing model used by option sellers. Read about Using Options Greek on Smart Money by Angel Broking."

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