Stock price increase, delta of call option increase, why?

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mylinh

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In Swheser book it states that that when stock price increase, delta of call option increase?
Should it be inversed since:
From dC = delta*dS we have delta = dC/dS so if stock price increase we have dS increased then delta should decrease?
 
Remember though that when stock price increase the value of a call option increases too. Since the dC in the numerator increases by a larger percentage that the dS in the denominator, delta increases overall. I like to think of it in terms of the graph in Schweser notes that shows the pre-expiration post-expiration payoff of a call option. As stock price increases, the slope of the pre-expiration payoff becomes steeper i.e. delta becomes larger.
 
excellent! thanks for the very good answer!
 
yes but up until delta=1.0, then it no longer increases, no matter how much the stock increases…just to be a little picky :-)
 
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