What is Delta in options trading?
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massimiliano
Apprentice
Joined: 19 Jun 2007
Posts: 9
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 Posted: 07/22/08 - 06:29 Post subject: |
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| I have been planning to start a business and I expect to get a pretty good profit from it. I will be mostly in trading and I seek to assure the best possible position. Now, I would like to know more about what is delta in options trading. If anyone could help that would be great. |
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devlen
Apprentice
Joined: 23 Jan 2004
Posts: 7
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| Posted: 08/20/08 - 23:49 Post subject: |
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| Any investment carries with it a risk in part. You always need to have a good strategy, and one of these is ensuring the value of your portfolio. That said, you can have use of delta (also called hedge). It is a ratio with which you can measure the change that happened for an asset that underlies an option in relation to what is derived from it. You calculate it when you look at intervals for which a price is changed. If for every dollar a price declines 50 cents for a put, delta is -0.5. On the other hand, calls are reverse, and there the value rises for a price interval, so the delta is positive. The affect on prices can then be significant, as delta gives clear overview of an option potential and gives a signal to traders. |
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