What is Delta – Options

Delta is most useful as an approximation of the chances of being in the money. So if you sell a put with .35 delta it means it has an approximate chance of 35% of being in the money.

Delta is the ratio at which a option’s price will change in relation to the stock/ ETF price.

For example, if a stock option has a delta value of 0.75, this means that if the underlying stock increases in price by $1, the option will rise by $0.75, all else equal.

You can use Delta as a risk measurement tool. Delta can give you an idea of your directional exposure.