To
saraldey
Delta is another way of expressing the probability of an option expiring
in-the-money. This makes sense because an ATM call option has a Delta of
0.5; i.e., 50%, meaning a 50% chance of expiring ITM. A deep ITM call will
have a Delta of near 1, or 100%, meaning a near 100% chance of expiration
ITM. A very out-of-the-money call option will have a Delta of close to zero,
meaning a near zero chance of expiring ITM.
Delta can be interpreted both in terms of the speed of the position and
the probability of an option expiring ITM. Some advanced traders like to
trade with the sum of their portfolio Delta at zero, otherwise known as Delta-
Neutral trading. This is by no means a risk-free method of trading, but it is a
style that enables profits to be taken regardless of the direction of market
movement. However, this is only really suited to professional-style traders
who have the very best technology solutions and a lot of experience.
Thank You
