Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Trader J's Inner Circle -- Ignore unavailable to you. Want to Upgrade?

To: ajtj99 who wrote (45532)	8/7/2001 6:24:46 PM
From: LTK007	Read Replies (1) \| Respond to of 56537

in spite of immense disire to run CSCO up,Chambers had nothing but vague,token gestures of hope with red flag wavings in the form of cautionary statements. It is amazing hearing talking heads saying,"ah ah ah is this NOT good news?ah ah ah well maybe the market will shake this off?--endless BS on board a leaking vessel. CSCO now 18.96,was as high as at least 19.40 AH. New Economy folk are out strong saying todays productivity number proves new economy is working. Is stretching your workforce to the max,a new economy? I don't think so. The "new economy" i feel has been based in the most part on Americans just working very hard,and not "O you see how easy it is now with high tech".Max

To: ajtj99 who wrote (45532)	8/7/2001 10:07:06 PM
From: Londo	Read Replies (2) \| Respond to of 56537

Delta is a real number between 0 and 1 that tells you the instantaneous change in the option price as the price of the underlying security changes. For example, if option XYZ has a strike of 10, trading for $1.00, and underlying stock is at 10 bucks.. if the underlying goes from 10 bucks to 11 bucks, if the option price goes to $1.60 (a change of 60 cents per 100 cents in the underlying), the delta is 0.60 or 60%. Of course, at $11/share, another one dollar increase of the underlying security will increase the option price more.. so for example, if the underlying goes up to $12/share, and the option goes to $2.30, that means the delta at that price is 0.7 or 70%. Better example: See those QQQ August 90 call options? The delta on that right now is so close to zero it's not worth calculating. The delta on the QQQ August 25 call options is SLIGHTLY under 1. A good rule of thumb is that an at-the-money option has a delta of ROUGHLY 50%. More implied volatility means lower delta, and less implied volatility means higher delta. So delta is a function of the standard black-scholes variables, the important ones being: option price, volatility, strike price, time remaining, and price of underlying security. It's not a very difficult concept to grasp. Oh, one last thing.. Delta is a derived variable, so how you go about calculating it depends on what option model you use to value them. But black-scholes is generally a good enough approximation.