From Theory To Practice - February 8, 2021 - Strong Delta and Weak Delta
As high probability traders, we typically use delta as a gauge for the likely success rate of our trades. But the most classic way to interpret delta is as a measure of how an option’s price will move when the underlying stock moves by $1. As a result, it’s important to apply this filter to the moneyness of our trades to help us understand the strength or weakness of the deltas on our positions.
To help illustrate this point, we use the ATM Put that we sold in SLV as a real-time example.