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Root Strategies: Final Review

Recap concepts related to risk profiles and single-leg strategies

Delta: Directional Bias, Probability, & Velocity of Risk

Delta indicates directional bias – positive delta means bullish, negative delta means bearish. For options, it can also be used to estimate the odds of expiring
as well as the share equivalency.

Shares

  • Long shares carry positive delta which means they are a bullish strategy.
  • Short shares carry negative delta which means they are a bearish strategy.

Calls

  • Long calls carry positive delta. They are a bullish strategy.
  • Short calls carry negative delta. They are a bearish strategy.

Puts

  • Long puts carry negative delta. They are a bearish strategy.
  • Short puts carry positive delta. They are a bullish strategy.

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root strategies