Question

If you delta hedge short put position when market oscillates do you “buy high sell low” stock or do you “sell high buy low” stock?

Answer 1

Delta is a theoretical estimate of how much an option’s premium may change given a $1 move in the underlying. For an option with a Delta of .50, an investor can expect about a $.50 move in that option’s premium given a $1 move, up or down, in the underlying. For purchased options owned by an investor, Delta is between 0 and 1.00 for calls and 0 and -1.00 for puts. For sold options, as the investor essentially has a negative quantity of contracts, we find that short puts have a positive Delta (technically a negative Delta multiplied by a negative number of contracts); short calls have negative Delta (technically a positive Delta times a negative number of contracts).

So, on the basis of above discussion, "we will sell high buy low"