Parent term

Delta is the ratio that compares the change in the price of an asset, usually a marketable security, to the corresponding change in the price of its derivative. Its values can be positive or negative depending on the type of option. Delta is an important variable related to the pricing model used by option sellers. Professional option sellers determine how to price their options based on sophisticated models that often resemble the Black-Sholes model. Delta is a key variable within these models to help option buyers and sellers alike because it can help investors and traders determine how option prices are likely to change as the underlying security varies in price.