Best Strike Prices for Option Buyers & Sellers Using Delta!
The strike price of an option is the price at which a put or call option can be exercised. It is also known as the exercise price. Picking the strike price is one of three key decisions (the others being time to expiration and a stop limit order) an investor or trader must make when selecting a specific option. The strike price has an enormous bearing on how your option trade will play out.
To pick a strike price, you'll need to calculate several different scenarios using possible prices at option expiration to determine potential profits and losses if you hold the options until they expire.
There are various risk measures for options such as delta, gamma, theta, and vega . In this video, we'll take a closer look at delta as it relates to actual and combined positions—known as position delta, which is a very important concept for option sellers. Delta is a ratio that compares the change in the price of an underlying asset with the change in the price of a derivative or option.
Seasoned derivatives expert with over 6 years of experience across equities, derivatives, and commodities markets. With a proven track record of successful trading and deep market insights.
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