How To Calculate The Net Delta Of A Position

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by Gavin in Blog
February 8, 2024 0 comments
How To Calculate The Net Delta

Calculating the net delta of an option position is a crucial skill for traders seeking a comprehensive understanding of their portfolio’s risk and potential reward.

Most trading platforms can calculate the net positional delta of a complex options position consisting of multiple legs.

This position delta will tell you how bullish or bearish the options position is.

For example, this bull put spread has a net position delta of positive 8.32, as shown by OptionStrat below:

How To Calculate The Net Delta

As part of the net position Greeks, this number is only available on OptionStrat with paid membership.

Because the net delta is a positive number of 8.32, it is a bullish trade that profits if the underlying price goes up.

The larger the magnitude of this delta, the more bullish the trade is.

If the delta is negative, then the trade would be bearish.

This bull put spread consists of buying a put and selling another put option at a higher strike.

Both options have the same expiration of Jan 19, 2024.

The put option was purchased with a strike price of 1960 on the RUT index.

The details of individual Greeks of that option are shown in OptionStrat as follows:

How To Calculate The Net Delta

The option that was sold had a strike price of 1985 with the following Greeks:

How To Calculate The Net Delta

While the net position Greeks are available with a paid membership, the individual options Greeks are available for free.

Based on the delta of each option, we can compute the net delta of the bull put spread.


By summing up the individual delta’s.

The long 1960 put option has a delta of -0.363; this makes sense because a long put is bearish, so the delta should be negative.

The short 1985 put option has a delta of 0.446; this makes sense because a short put is bullish, so the delta should be positive.

Always check to make sure the delta sign makes sense before summing them up.

Some platforms do not flip the sign of the Greeks depending on whether you are buying or selling, while other platforms do.

So the net position delta of the bull put spread is:

-0.363 + 0.446 = 0.083 delta per share

These numbers are presented on a “per share basis,” similar to how option prices are quoted.

Since one option contract involves 100 shares, we multiply by 100 to arrive at a delta is that on a per-contract basis:

0.083 x 100 = 8.3 delta per contract

This matches the number that OptionStrat had shown as the net positional delta.

If an option leg has more than one contract, then you have to multiply by that number for that leg.

How bullish is this credit spread?

It is as bullish as if you owned 8.3 shares of the underlying RUT.

You can not own shares of the RUT (because it is an index).

But that is how you can think of net position delta.

You can own 100 IWM shares (the ETF that tracks the RUT).

If you asked OptionStrat what is the net position delta of owning 100 shares of IWM, it would tell you that it is 100 deltas.

How To Calculate The Net Delta 


In this example, we computed the net position delta.

But you can follow the same process to compute the other Greeks, such as theta and vega.

While it is possible to manually compute the net position Greeks so that you don’t have to pay for OptionStrat membership to have it compute them for you, some active traders who need these numbers regularly for complex positions might find it quite a time-saver and less error-prone if the platform was able to compute them.

We hope you enjoyed this article on how to calculate the net delta of a position.

If you have any questions, please send an email or leave a comment below.

Trade safe!

Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.


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