Definitiion of NET DELTA

[Guest jjfunds]

SOMEBODY CAN explain clearly the definition of NET DELTA? i see here some people make some mistakes making a relation with OPTIONS TRADING.

will be appreciate a good explanation

[⭐ JDizzle22]

SOMEBODY CAN explain clearly the definition of NET DELTA? i see here some people make some mistakes making a relation with OPTIONS TRADING.

will be appreciate a good explanation

 

Delta is an option term as well as a technical analysis terms for analyzing buy and sell volume.

 

Delta for options, from google: "For example, with respect to call options, a delta of 0.7 means that for every $1 the underlying stock increases, the call option will increase by $0.70. Put option deltas, on the other hand, will be negative, because as the underlying security increases, the value of the option will decrease." So think of net delta as the entire delta of your portfolio

 

The real application of delta for options is this: if an option trader wants to hold an option trade overnight with a delta of +0.7 or -0.7, often their trading firm requires them to have a net delta (the total delta of their entire portfolio) of 0, so they can buy or sell the S&P to lower/raise their net delta to 0 (they don't have to buy/sell S&P, they could put on other option trades or buy/sell other indexes). What that really means is if they lose money on their option trade overnight/weekend, that loss will be offset by the gain in their S&P trade, so they are delta neutral.

Edited February 7, 2015 by JDizzle22
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[Guest jjfunds]

this is for options but im trying to clear some definitions when talk about net delta deltas in some NT7 indicators we use

[⭐ JDizzle22]

this is for options but im trying to clear some definitions when talk about net delta deltas in some NT7 indicators we use

 

You said in your statement, "some people make some mistakes making a relation with OPTIONS TRADING." You are the one who is making the mistake--it is an option terminology. I was trying to educate you on the term in options trading.

 

Read this thread with links (there is different ways of calculating delta): https://www.sierrachart.com/SupportBoard.php?ThreadID=11689

 

You can apply that term to any time-frame or number of bars on any chart for technical analysis.

[Guest jjfunds]

then when we talk about deltas in for example nof indicators we are talking about a relation between options and futures? ithink you are wrong pal

[wcicom]

In futures trading "Net Delta" refers to the difference of buying and selling contracts. If more volume is on the buy side...Net Delta is positive, and it is negative if more volume traded on the sell side. Keep in mind that "Delta" in it's own right = one net future exposure. So when we have a mixed position of options and futures, or simply different options, it is important for trader to know his exposure in net delta's....actual number of complete future contracts which his/her position equals to.

Now whether the software you use calculates delta correctly is a whole other story.

 

Hope this helps,

Edited February 7, 2015 by wcicom

[tradernate]

He was only answering your question in the manner which you had asked...BTW it was correct. Clearly you have issues!

 

then when we talk about deltas in for example nof indicators we are talking about a relation between options and futures? ithink you are wrong pal

[⭐ JDizzle22]

then when we talk about deltas in for example nof indicators we are talking about a relation between options and futures? ithink you are wrong pal

 

LOL! You obviously did not read either of my posts. I do this for a living, I think I know what I am talking about.