The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering yet another member question which is, “Can option Deltas ever be greater than 1?” If you go back and think about what option Deltas refer to when it comes to single option contracts, is it refers to the change in price of the option contract or a potential change in price of the option contract as a result of a $1 increase or decrease in the underlying security. Generally, call options have positive Deltas and put options have negative Deltas. And so, when we see a dollar increase in the underlying stock, that's positive for call options, that's negative for put options. But the question is – Can these Deltas ever go above 1? And the short answer to this is no and the reason that they can’t ever go above 1 is because all that single option contract could do is trade at parity with the stock and this Delta of 1 means that for every $1 movement up in the stock, there’s a $1 movement up