The Delta of an Option Is

question 55

Multiple Choice

The delta of an option is

• A)a measure of the option's price volatility.
• B)calculated by dividing the price of the underlying security by the change in the option's price.
• C)equal to the option premium.
• D)calculated by multiplying the change in the price of the underlying security by the change in the option's price.
• E)usually negative.

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Definitions:

Competitive Price-Taker

A market participant who accepts the prevailing market price as given and has no influence over it due to the high level of competition.

Profit

The financial gain attained after subtracting total expenses from total revenues.

Competitive Price-Taker

A business that has no control over the market price and must accept the prevailing market price set by supply and demand forces.

Marginal Revenue Curve

A graphical representation showing how marginal revenue varies with changes in quantity sold.