Option Strike Price vs Delta Greek

In this we're going to quickly discuss one of the major factors that determine an option's delta: the strike price of the option relative to the stock price. Here's a quick guide to in-the-money, at-the-money, and out-of-the-money options:

In-the-money: Call options with a strike price below the stock price; Put options with a strike price above the stock price.

At-the-money: A call or put option with a strike price equal to or near the stock price.

Out-of-the-money: Call options with a strike price above the stock price; Put options with a strike price below the stock price.

Most of the time, options in each of these categories have deltas in the following ranges:

The following visual serves as a visual representation of the table above:

At strike prices lower than the stock price, call deltas are closer to +1, and put deltas are closer to 0. At strike prices near the stock price ($207), option deltas are close to ±0.5. At strike prices above the stock price, call deltas are closer to 0 and put deltas are closer to -1.

As an options trader, you have full control over the strike price you trade.

When trading in-the-money options, you will have more profit/loss exposure when the stock price changes.

When trading out-of-the-money options, you will have less profit/loss exposure when the stock price changes.