Delta

The ratio of the change in price of an option to the change in price of the underlying asset. Also called the hedge ratio. Applies to derivative products. For a call option on a stock, a delta of 0.50 means that for every $1.00 that the stock goes up, the option price rises by $0.50. As options near expiration, in-the-money call option contracts approach a delta of 1.0, while in-the-money put options approach a delta of -1. See: hedge ratio, neutral hedge. Call deltas range from 0.00 to +1.00; put deltas range from 0.00 to -1.00. If the call delta is 0.69, the put delta is -0.31 (call delta minus 1 equals put delta; 0.69 -1 =-0.31).

delta

The change in the price of an option that results from a one-point change in the price of the underlying stock. For example, a delta of 0.5 indicates that the option will rise in price by ¹/₂ point (50¢) for each 1-point ($1) rise in the price of the underlying stock. Call options have positive deltas; put options have negative deltas.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Delta.

The relationship between an option's price and the price of the underlying stock or futures contract is called its delta.

If the delta is 1, for example, the relationship of the prices is 1 to 1. That means there's a $1 change in the option price for every $1 change in the price of the underlying instrument.

With a call option, an increase in the price of an underlying instrument typically results in an increase in the price of the option. An increase in a put option's price is usually triggered by a decrease in the price of the underlying instrument, since investors buy put options expecting its price to fall.

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References in periodicals archive

It added: "Following a period of engagement and due diligence, the board has concluded that a transaction with Deltic would not be in the best interests of the company's shareholders.

Bar chain rejects second merger deal

Expert vehicle technician Raymond Batchelor preparing Iconic 1960's Deltic locomotive 'King's Own Yorkshire Light Infantry' (KOYLI), at the National Railway Museum at Shildon, County Durham, ahead of it's important role alongside steam legend Flying Scotsman in the museum's ground breaking 'Stunts, Speed and Style' display, which will take place at its York site in March 2016 and form part of its highly anticipated Scotsman Season

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Deltic and Potlatch, Made for a Merger

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Deltic Timber Corporation (NYSE:DEL) revealed on Monday that its board of directors approved a quarterly dividend of USD0.100 per share.

Deltic Timber to pay quarterly dividend of USD0.100 per share