Business / Taxes / 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 investment. With a call option, an increase in the price of an underlying investment 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 investment, since investors buy put options expecting stock prices to fall.
Business / Finance / Delta Hedge: The ratio of the change in price of a call option to the change in price of the underlying stock. Also called the hedge ratio. Applies to derivative products. Measure of the relationship between an op MORE
Business / Finance / Delta Neutral: A dynamic hedging strategy using options that calls for constant adjustment of the number of options used, as a function of the delta of the option. MORE