Replies to post #6288 on Short Term Trading Member Forum

[DowDeva]

Denmo, Pmiles,

That's where delta comes in, in your trade, denmo. If you're 'deep in the money,' i.g., if the stock is trading at, say, $100, and your strike price is $50, then you're $50 'in the money,' and the stock will trade almost point for point. Delta would equal 100, in this case. If you bought the option at $95 strike price, you might be flat due to time decay reducing delta.

A good way to trade options in the beginning is to trade them with not a lot of time left (only one or two months out on OE) and deep in the money. It really is just like getting cheap stock.

Deva