How Does the Delta of an Option Relate to Its Leverage?

Delta measures the option price's sensitivity to a $1 change in the underlying asset's price. Since a small premium controls a large underlying value, Delta helps quantify the effective leverage.

For example, a Delta of 0.50 means the option price moves 50 cents for every $1 move in the underlying. The higher the Delta, the more the option behaves like the underlying asset, and the higher the effective leverage relative to the premium paid.