The Delta of an Option Measures,approximately

question 17

Multiple Choice

The delta of an option measures,approximately,

• A)The dollar change in option value for a $1 change in the price of the underlying.
• B)The percentage change in option value for a 1% change in the price of the underlying.
• C)The risk-neutral probability that the option finishes in-the-money.
• D)The reaction of the option to a sudden jump in the price of the underlying.

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Definitions:

Isocost Line

A graphical representation in economics that shows all possible combinations of inputs that can be purchased for a given total cost.

Capital

Assets including money, machinery, and structures employed in the creation of products and services.

Total Expenditures

The sum of all expenses and spending by an individual, organization, or government within a specified period.

Isocost Line

A graph line that shows all combinations of inputs which cost the same total amount.