Delta isn't all it's cracked up to be

I had a small lesson in Delta, one of the "Greeks" having to do with options. This one represents the expected option price change relative to the underlying stock price change.

For example, a Delta of 0.5 would indicate an expectation that if the stock price moved $1 the option would move 50 cents.

Today I was watching a position that was held overnight that was down about 35 cents with a Delta of 0.45. The stock was set to open up about $1.50 which would lead one to conclude that the option should move approximately 68 cents. Instead it moved 40 cents, which was enough to put the position in a slight profit and let me close it but demonstrated that the Delta is not a sure thing.

I have known this all along but I paid particular attention to this one out of curiosity. Often the option price does not move as expected as there is a supply and demand issue as well as a certain expectation of a stock's most likely move.

On the regular trading front trading is not so hot right now. The market is at a strange point and have been moving or oscillating while not following any particular pattern... at least not one that is very predictable.

We'll see how things fall out later this week.

Jeff.