JAN 20 calls has 70 delta, sold 10 calls, that contributes 700 short delta, right? net long delta is 300, right? that is like owning 300 shares, so what? I fail to see how is this information useful. How can I use this info to my advantage? it is not telling me how under/overpriced the option is, is it? Thank you.

your short 70 deltas per contract sold..... you add all of your deltas... if you were short 70 delta calls and long 3, 20 delta calls.. you would be net short 10 deltas.. (ratio backspread) delta is the first order derivative to option price.. measures the rate of change of option value with respect to changes in the underlying asset's price http://en.wikipedia.org/wiki/Greeks_(finance) read more.. its to assess hedging requirements ... to stay neutral if you were short a 70 delta call.. you would go long 70 shares or 70 deltas in the underlying to hedge the short call position.. delta means difference..

i think he thinks since he sold ten calls with a 70 delta, that the remaining difference (300) is long. you're just short 700 deltas, brah.

yo brah, you crack me up. stock has a delta of 1. u have 1000 shares so that's 1000 long deltas. the jan 20 calls have a 79 delta. u sold ten of these so that's 790 short deltas. net effect is 210 long deltas. that means at this moment, your position is acting like u bought 210 shares. another way to look at it is, for every dollar that the stock goes up, you will make 210 bucks. and maybe most important, delta defines directional risk, so if you have a large positive delta, that means you also have a big risk to the downside.

Maybe you missed the part in the book: "You own 1000 ABCD ..." ?? So your portfolio consists of 1000 ABCD shares long and 10 calls short. Stock delta is always 1. As you said, the net delta of your portfolio is 300. This means that when the price of ABCD drops $1 then your portfolio loses $300. But options have other sources of risk. If IV goes up then you can make or lose money. How do you assess that? You need another "greek" i.e. vega. So each greek is related to a different source of risk. So they look pretty useful. How you calculate them is another thing though.

+1 .... gamma would be the rate of change of your delta ... so when the spot goes down you become even longer .. meaning you get more deltas in your position.. the measure of the rate of that change is the gamma.. you failed to put in your example from the beginning that you had a offsetting position in the underlying.. "delta one" as its referred to.

Thanks for the reply cdcaveman, kapw7 & ferryc. now that's interesting, can you elaborate with an example please?