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# Long Delta Strategies : What is Delta?

If you have ever traded options before, you’ve likely seen a numerical value for "delta" on your trading platform. Delta is simply one of several values options traders refer to as "greeks". These numbers are all being used in calculations behind the scenes to determine what the fair premium for an option contract is. Other greeks include Theta and Gamma, but today we will be considering delta and how you can profit from it.

So, we know delta is a number, and we know that delta corresponds to an options price, but how? Put simply, delta is a ratio. The delta ratio represents how the price of an option will change for every \$1 the stock moves . This can be confusing to think about, so let's use an example. Let’s say I purchase a call option on stock ABC. This call option has a delta of 40. If stock ABC moves \$1 higher, my call option will gain \$40 in value. Similarly, if stock ABC moves down \$1 tomorrow, my call option will lose \$40 in value.

Options can have a negative delta as well. Put options always have a negative delta, because they gain value when a stock moves downwards. Call options always have a positive delta, because they become more valuable when a stock moves upwards. However, Delta does have a cap. A single call option can have a delta value ranging from 0-100. A put option can have a delta value ranging from -100 to 0. This makes a lot of sense when considering options correspond with 100 shares of underlying stock. Options that are in the money will have a delta closer to 100 or -100. Options that are out of the money have a lower delta value closer to 0. Now that we understand the mechanics of delta, let’s examine how to make profitable trades by using delta as our main vehicle.

## Long Delta Strategies vs Other Strategies

Because delta is associated with the direction of a stock's movement, we will look to use delta to profit when we have a strong opinion that a stock will move up or down. This is also called directional trading. A large majority of options traders tend to stray away from directional trading, and instead opt to make most of their money by selling options to collect cash. They then wait for the options they sold to expire worthless, or buy the options back for a lower price. These are called long theta strategies. Good examples of long theta strategies are short put spreads, and iron condors. These strategies usually have a higher probability of being profitable. For what reasons would we want to enter a trade that has a lower chance of being profitable? Certain long delta strategies, such as the long call spread, have notable benefits over long theta strategies.

## Benefits of Long Call Spreads

One benefit of long call spreads (aka: long delta strategies) that will be attractive to many new options traders is that it is a much cheaper position to enter than a short put spread. These are both bullish positions that will benefit when the stock rises in value. However, the long call spread will tie up much less of your buying power, and additionally generate more profit from a directional move. Let’s use a real world world example to demonstrate.