Delta questions
I have a call option (K=10) and the underlying future (U=5) is at 5 right now. Then Delta is partial extrinsic value/ partial U.
My question is, why is it less than 1? If the price of the future go up by a small amount $x$, why can't the extrinsic value goes up more than that. I am looking for a more finance or intuitive answer.
In math, C-P=U-K, so C'-P'=1. So C'=1+P'<=1.
Another thing is: i think delta has no meaning in real life, (there is never a time where the underlying goes up while the time, Vol and everything else are freeze). You can just change the underlying price without changing any other stuff.
And lastly, how does it direct trader in real work?
don't use fancy word. Thanks :)