Reading 15, page 285. Candidate is asked to discuss the long call option strategy that would maximize profits if stock price goes from 60 to 70. The solution says that the best strategy is option B because the 60 strike call is cheaper and offers the largest profit potential per unit of premium paid. This part is easy enough to understand.
But… then the text notes that B has a lower delta and a higher gamma and will benefit from a higher gamma if stock goes to 70. If we’re bullish on a stock, wouldn’t we rather have a higher delta not a lower delta? Why does the author gum up the answer with this discussion of delta & gamma? Is this part of the solution or just superfluous information?
If you’re coming out of a corner side by side, would you rather be going faster with less acceleration, or going slower with more acceleration?
The answer is . . . it depends.
If the finish line is really close, going faster’s probably better. If the finish line is farther away, having greater acceleration may well be better.
Say what?
I think s2000magician is using a calculus analogy that’s dressed up as a sports analogy!!