A short put will have positive delta. So let's say you shorted a 15 delta AAPL put and AAPL is trading at $218.54. Your notional exposure will be 15 x 218.54 which is $3,278.10. Note that this is NOT your max loss, just your notional exposure at that point in time. Like having $3,278.10 invested in AAPL stock. Let me know if that makes sense.
So if we short a put, how do we calculate the delta dollars? Or how can we better calculate our exposure when shorting options?
A short put will have positive delta. So let's say you shorted a 15 delta AAPL put and AAPL is trading at $218.54. Your notional exposure will be 15 x 218.54 which is $3,278.10.
Note that this is NOT your max loss, just your notional exposure at that point in time. Like having $3,278.10 invested in AAPL stock.
Let me know if that makes sense.
At 2:22 you say, "the put option will decline by $4.50." Correct me if I'm wrong but didn't you mean "will decline TO $4.50?
Yes, I misspoke and should have said TO $4.50. Good catch!