What is Delta in Options?

Delta measures how much an option's price moves when the stock moves $1. A 0.60 delta gains about 60 cents per $1 rise in the stock. Calls have positive delta, puts negative.

Delta runs from 0 to 1 for calls, and 0 to -1 for puts because puts gain when the stock falls. Where it sits depends on where the stock is compared to your strike price. A $50 call with the stock right at $50 is a coin flip, so its delta sits near 0.50, catching about half of each dollar move. With the stock at $70 that call is almost certain to pay off, so it behaves nearly like owning the stock, delta close to 1; with the stock at $30 it is nearly hopeless, delta near 0, barely reacting to anything. That is why delta grows as the stock climbs toward your strike: every dollar closer makes the option more of a sure thing, and delta is tracking those odds. Traders also use it as a shortcut for exposure, since a 0.30 delta option moves like holding 30 of the 100 shares it controls.

Your bonus contract pays you every dollar of store sales above $1 million at year end. At $400,000 in November, the line is out of reach, so today's sale barely changes what that promise is worth; at $1.2 million the promise is already pure money, and every sale adds to it nearly dollar for dollar. Delta is that response rate, climbing from near zero to nearly full as the sales total closes in on the line.