Mastering Option Greeks: Practical Insights into Delta and Its Real-World Impact on Trading

where you can understand Option Greeks in detail in one go then you have come to the right video so today in this video you are going to learn about Option Greeks in detail and without wasting a single second today we are going to start a detailed video of Option Greeks with Rehan Shobhadra. Let’s start with Greeks there is a lot of detailing in the market in bookish language that delta is this, theta is this, viga is this, gamma is this but after reading the bookish language do we understand what is its use in the real world? So without wasting time I will tell you that delta is this, this, this, and it changes, there is no use in telling this I will tell you straight away that if you are in bank nifty, you are a buyer, if you would have bought then would delta have helped you here so we will try to understand them by taking a real world example, we will not go into the bookish language here I have written 5 Greeks which are useful and important for you to understand and will be useful in your trading we are also making a series, it will be used in many places so I am trying to explain them first of all we start with delta, its bookish language says that the rate of change in the option price based on the underlying move is called delta, so basically if your bank nifty has gone above 100 points, and at that time the delta of any option was 0.5 then it means that whatever you have bought call or put of that strike price has increased by 50 points this is only the theoretical definition of delta now we will understand the meaning of delta basic, so the range of delta 0 to 1 Now 0 to 1, the positive side is with the call, the negative delta is with the put, which goes to negative minus 1 Now we will take the example of one side, so that we can understand better we have taken the call side so we take the delta of one side, we go to the call side and try to understand, the data of the call side is between 0 to 1 so there is a graph of delta, the rate of change graph of delta is something like a flat line, then a very simple line and then it flat it is actually the graph of delta, you can search on Google, so you will get a graph like this I will explain its meaning, it means deep OTM, if you remember last time, we talked about deep OTM and ATM this area here is ATM, and the remaining part is near OTM, which is very close to ATM there so it means that if the real sharp impulse move of delta impacts in any option which option is that, basically at the money and 2 out of the money near it and a little away from the money means After this if you go deep in the money then it is flat if you go deep out of the money then it is flat that means delta does not have any effect in deep in the money and deep out of the money it moves in a flat line so in a way you are trading in futures no external factor is getting involved there external factor means my delta was from here but if you are buying somewhere near ATM suppose ATM delta is 0.5 then you are trading at 0.5 delta so when the market is moving from here then it goes up from 0.5 to 0.6 or 0.7 but if your trade is of 0.2 delta then 0.2 to 0.3 delta what will happen if there is a move of 150 points in the market then it will go up so this is what I wanted to show that in trading, buying the option was from this place if you will be in this area while buying the option, then you will get more profit in terms of percentage because delta is also with you this is happening because how the premium is calculated So, the rate of change in the option price with the underline means that based on the underline, the percentage of delta will tell you how much the option price will change so we will just take an example, here you will see that now the money is 46,900, our delta at 46,900 is 0.5 to 0.5 0.5 means just on a move of 100, so let’s imagine we have taken this call, this call is buying in some software, you can see 50, so let’s take 0 to 100, that is also the same, there is no difference I have to buy this call, and I have a delta of 0.5, and I think the market is going to go to 47,100 means it is going to go up by 200 points this is my estimate, I want to claim so I as a buyer I have bought this call of 47,100 at Rs 193, and I think the market will go up let’s do a simple calculation, suppose the market goes up So what will be the price, the rate here was 0.40 and it has increased by 200 points so what will be its price, so 200, 40, 40, 80, 80 should be added to it, this will be its price, and I will tell you another shortcut of this, what is its shortcut, you go two steps up,