«Sensitivity to Price Movement.»


Delta might be the most fascinating Greek for the simple fact that it is multi-dimensional. It has not one but three primary definitions or uses. Today we’ll look at the first.

Delta measures how much you make/lose if the stock rises $1.

Bullish positions have a positive delta, signaling you profit from a price rise. This includes long stock, long calls, and short puts.

In the case of stock, one share equals one delta. So, if I’m long 225 shares of stock, my delta is 225.

Options operate slightly differently when it comes to delta. One contract could represent anywhere between zero and one delta, depending on whether the option resides in- or out-of-the-money. For example, if I’m long a call with a delta of 0.60, then I make 60 cents per share per $1 move in the stock.

And since most options control 100 shares of stock, we would say that a 0.60 delta call rises $60 for every $1 move in the stock. That is 0.60 x 100 shares = $60.

Bearish positions have a negative delta, signaling you lose when prices rise. This includes short stock, long puts, and short calls. They behave similarly to everything we explained, except they lose money when the underlying stock rises.

Tomorrow we’ll look at how delta reflects the probability of making money.

🛑 Upcoming Options 101 Webinar: Options Greeks for Beginners with Coach Tyler Craig | February 28th, 2022 at 8:30 PM EST on YouTube

Want to really understand what makes an options contract tick? Learn the Greeks. They are the metrics that allow you to measure everything. Join Tackle Trading and get ready for an insightful discussion that will help you take your options trading to the next level.

On this webinar you are going to learn:

✅ What are the Options Greeks?
✅ The two dimensions of Delta
✅ Time Decay and Theta
✅ The role of Gamma
✅ Volatility and Vega

You don’t want to miss it!

Video of the Day: Options Greeks Guide Part 2: What Is The Black-Scholes Model (BONUS: FREE Options Greeks Guide)

What is the Black-Scholes Model and why is it relevant to your trading? This is what this video will cover. Here are the topics:

✅ The History of the Black-Scholes Model
✅ The Mathematical Formula
✅ What it is used for
✅ How to use the Black-Scholes Model in your trading

Access the entire Options Greeks Guide video series

Continue learning about this powerful options trading concept: the Options Greeks. The entire Options Greeks video series can be accessed by clicking on the thumbnails below.

Chart of the Day: Tracking Delta on Thinkorswim (TOS)

Chart of the Day: Tracking Delta on Thinkorswim (TOS)

Brokerage platforms like ThinkorSwim make tracking delta for your open positions and overall portfolio easy. If you don’t already have it as a column heading. Add it!

Today’s line up

Tales of a Technician: Bear Market Best Practices

Today’s videos is a follow-up to January’s post on how I’m managing the bear market.

Traders Lounge 11 AM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

The Coaches Show 8:30 PM EST

This is our weekly MasterMind group. Join the coaches tonight, 8:30 PM EST to discuss the markets and help you prepare for the week.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.

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