9 Minute Read

Tackle Today: Direction & Delta

March 30, 2023

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«The first dimension»


Yesterday’s message introduced you to the 3-dimensions of options: direction, volatility, and time. We will explore each in greater detail over the next three Tackle Todays.

Delta is the options Greek that measures how sensitive an option or option position is to direction. Bullish trades have a positive delta, and bearish trades have a negative delta. The higher the number, the more exposure you have.

The two most common directional options strategies are long calls and long call verticals (aka bull call spread). Your success with them relies heavily on market timing. Even more so than with stock. Here’s why.

You have a profit if you buy a stock at $50, and it rises even one penny. How long it takes or how high it rises doesn’t matter. Just rise a penny at some point in the future, and you have a profit.

Directional options trades are trickier. When you buy a call option or call verticals using ATM or OTM options, the stock must not just rise but rise far enough, fast enough to capture a gain. If the stock climbs but does so too slowly,  you lose. If it climbs but not far enough, you lose.

This is one big reason directional trading can be more challenging when buying options. There are redeeming qualities such as leverage and limited risk, but some decide the drawbacks aren’t worth it. Instead, they try to trade volatility and time—more tomorrow.

Video Of The Day: Trade Masters – Hot Trading Picks From Tackle Trading

Every Wednesday at 7 PM EST join us on the Trade Masters Show where two Coaches go head-to-head to see who can find the best #tradingsetup.

Chart of the Day: Intel (INTC)

Intel is coming back from the dead. Its price chart boasts a classic triple bottom breakout. 

Today’s line up

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.

Cashflow Club 8:30 PM EST

Held every Thursday before Friday’s option contract expirations, this show helps you perfect your favorite cashflow strategies.

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 the coaches at Tackle Trading can deliver.

Tackle Trading: Financial Freedom is a Journey. Sign up now for a 15-day free trial.

Financial freedom is a journey

Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.

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