It is standard trader lingo on the trading floor. “What’s your delta of making it to the party tonight?” “What’s the delta the broker comes back and buys more of these?” “I’m about 90 delta I’m going to dump Sheila tonight”. Option traders have probably used the word delta in this context every single day of their life and if you learn to trade options like a professional, you may too.
It’s the “traders’ definition” of delta—that is, delta is the likelihood of an option expiring in-the-money. Though this definition actually has a few mathematical shortcomings, making it not entirely technically correct, every professional option trader I know thinks about delta this way. And, in turn most traders borrow the concept of delta being the likelihood of success to adopt into their every-day speech.
The idea is every option has an associated delta figure attached to it. Like, at the time of this writing, the Apple (AAPL) September 655 calls have a 0.25 delta. Yes. That means that they change in value 25 percent like the underlying stock. But it also is interpreted by traders to mean that the AAPL September 655 calls have a 25-percent chance of expiring in-the-money.
This practical use of delta helps guide traders’ expectations and helps them make better trading decisions by factoring probability into their decision-making process. I encourage traders to think about option delta this way. You should start today. I’m 100 delta that you’ll be glad you did.
Senior Options Instructor