Delta is a measure that serves in derivatives trading to indicate the relation between the price of an option and the price of its underlying security.


The delta of an option is the discount factor. It will directly move the price change in security into the price change of that option.

It is the amount that an option’s price will move when its underlying asset changes one point in price. A delta of 0.5, for instance, will see the price of an option move 0.5 for every one-point move of its asset.

But, a delta of one means that the option will mirror the price changes of its underlying asset. A put option’s delta has a value in the range 0 to -1 and a call option’s in the range of 0 to 1.

So, say it is a price movement in relation to the change in the price of its underlying asset. 

Sometimes it can be alluded to as a hedge ratio and is most often used when dealing with options.


This is one of four major risk measures used by options traders. It measures the degree to which an option is open to shifts in the price of the underlying asset or commodity.

This measure can be either a negative or a positive figure, depending on whether the derivative is a call or a put.

This is because a put option, for example, will have a price that moves inversely to the price of its underlying asset. 

This neutral strategy belongs to options strategies. It has to create positions that aren’t be affected by small movements in the price of security.

The overall delta value of a position has to be as close to zero as possible. This is one of the ‘greeks’: a set of variables of risk with influence in options trading.