Cryptocurrency Q&A
Why is delta 0.5 at-the-money?
Why is delta 0.5 at-the-money?
LucyStone
Sat Sep 28 2024
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7 answers
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Could you please explain why the delta value of an at-the-money option is 0.5? I understand that delta measures the sensitivity of an option's price to changes in the underlying asset's price, but I'm curious about the specific reasoning behind this particular value for at-the-money options. Does it have to do with the strike price being equal to the current market price of the underlying asset? Could you elaborate on this concept further?
7 answers
SsangyongSpirited
Mon Sep 30 2024
Options trading is a complex yet intriguing aspect of financial markets, where investors can speculate on the future price movements of assets.
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ZenHarmonious
Mon Sep 30 2024
One key concept in options trading is the strike price, which represents the predetermined price at which the option holder can buy or sell the underlying asset.
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alexander_clark_designer
Mon Sep 30 2024
An option is considered "at the money" when its strike price is equal to the current market price of the underlying asset. In this scenario, the option is neither intrinsically valuable nor worthless.
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Dario
Mon Sep 30 2024
For call options that are at the money, the delta, a measure of an option's sensitivity to changes in the underlying asset's price, is typically around 0.5. This indicates that a $1 move in the underlying asset's price will result in approximately a $0.50 change in the option's price.
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DigitalBaron
Sun Sep 29 2024
On the other hand, an option is considered "out of the money" when its strike price is not currently favorable for exercise. For call options, this means the strike price is higher than the current market price, making it unprofitable to exercise the option.
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