Option Strike Price vs Delta Greek - Singapore Forex Trading, Singapore Forex Academy, Singapore Forex Association

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Option Strike Price vs Delta Greek

In this we're going to quickly discuss one of the major factors that determine an option's delta: the strike price of the option relative to the stock price. Here's a quick guide to in-the-money, at-the-money, and out-of-the-money options:
In-the-money: Call options with a strike price below the stock price; Put options with a strike price above the stock price.
At-the-money: A call or put option with a strike price equal to or near the stock price.
Out-of-the-money: Call options with a strike price above the stock price; Put options with a strike price below the stock price.
Most of the time, options in each of these categories have deltas in the following ranges:
The following visual serves as a visual representation of the table above:
Option delta vs. strike price.
At strike prices lower than the stock price, call deltas are closer to +1, and put deltas are closer to 0. At strike prices near the stock price ($207), option deltas are close to ±0.5. At strike prices above the stock price, call deltas are closer to 0 and put deltas are closer to -1.
When trading in-the-money options, you will have more profit/loss exposure when the stock price changes.
When trading out-of-the-money options, you will have less profit/loss exposure when the stock price changes.