Question

Delta measures the dollar impact of a change in which one of the following on the value of a stock option?multiple choice

a. volatility of the underlying stock price
b. risk-free interest rate
c. underlying stock price
d. option strike price
e. time to maturity

Answer 1

Delta measures the dollar impact of a change in the underlying stock price on the value of a stock option. Therefore correct option is C

Step-by-step explanation:

Delta measures the dollar impact of a change in the underlying stock price on the value of a stock option. It's one of the option Greeks and it represents the option's sensitivity to price changes in the underlying asset. A delta of 0.5 means that for every dollar the stock price increases, the value of the option will increase by 50 cents. Delta is crucial for investors interested in options trading as it helps them understand how the value of an option is likely to change with movements in the stock price.