What does an equity option's delta reflect?
A)The volatility of the underlying stock price
B)The dividends paid to the underlying stockholders
C)The number of shares needed to replicate one call option
D)The time to expiration

Question

Quizplus · Accepted Answer

Delta reflects the sensitivity of an option's price to a $1 change in the price of the underlying asset. It can also be interpreted as the equivalent exposure to the underlying shares that an option gives, which aligns with the concept of replicating the option with a certain number of shares.

What Does an Equity Option's Delta Reflect