My option portfolio's
Δ
is positive $5,000. I am happy to see the underlying stock price go up.

Question

My option portfolio's 
Δ
 is positive $5,000. I am happy to see the underlying stock price go up.

BlackTom AI · Accepted Answer

Here is a step-by-step look at each option in the context of a portfolio with a positive delta.
Option 1: 'Make sense' – With a positive Delta, the value of the option portfolio tends to rise as the underlying stock price increases. Therefore, being happy about the stock price going up is consistent with a positive delta, since the sensitivity (Delta) indicates a directional gain when the underlying moves higher.
Option 2: 'Make no sense' – This would be the choice if a positive Delta did not imply gains when the stock price rises. In reality, Delta measures the rate of change of the option's value with respect to moves in the underlying. A positive Delta means the option (or portfolio) gains value when the underlying price goes up, so saying it makes no sense would be incorrect.
Additional nuance: If the portfolio included a mix of long and short options, overall Delta could be positive or negative depending on net exposure. In this scenario, since the Delta is stated as positive, the expectation that the stock rising increases the portfolio's value aligns with standard Delta economics.
In summary, the reasoning aligns with Delta concepts: positive Delta implies a rise in value with upward moves in the underlying, making the 'Make sense' option the coherent choice, while 'Make no sense' contradicts how Delta operates.

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My option portfolio's Δ is positive $5,000. I am happy to see the underlying stock price go up.

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