Categories: Trading

Delta

The term delta in technical analysis is used to describe the rate of change in the price of a stock or other financial instrument in relation to the change in the price of its underlying asset. In options trading, Delta is measured as the sensitivity of an option’s price to changes in the price of the underlying asset.

How is delta used?

Delta is often used to assess the likelihood that an option will end up in-the-money, meaning that the option will generate a profit. A call option that has a positive delta, means that its price is positively correlated with the price of the underlying asset. A put option that has a negative delta implies that its price is negatively correlated with the price of the underlying asset.

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