Delta is one of those option greeks that is not entirely understood. We can stand by the definition of course, which is the amount an option will move with a one dollar move in the stock. There are time decay considerations of course, this is just an approximation but really tells us about the tremendous leverage options have over stocks.
For example, the Honeywell (NYSE:HON) September 'at the money' strike of 157.5 closed on August 24th at 2.56 (midpoint of the range). The stock is trading at 157.51. The current delta is .51. So, theoretically if the stock moves up 1 dollar in price this option will jump up 51 cents, or to 3.07. That is an astonishing 20% move in price (from 2.56 to 3.07) vs the stock price gain of less than 1%.
There are other considerations of course affecting the option price such has theta and gamma, which tug at the option price as the stock price stalls or moves slowly, which is natural. For all intents and purposes the delta is a good approximation of the potential reward related to a stock move.
That is some great leverage. But I look at delta as a probability tool. What are the odds the stock will finish at a strike by expiration? I like to know if a play is low or high probability and if I'm going to be paid based on the risk I'm willing to take. If I'm comfortable taking a low probability play, then that is my reference point.
Some option players like low probability, high risk trades. Delta helps you determine these probabilities.
It's very simple to assess the odds. Taking the above example, I would view Honeywell as having a 51% chance to stay in the money. It is currently right there, so why wouldn't it be 100%? We have to factor in the time consideration and the potential for the stock to move lower. If Honeywell had zero implied volatility (expectation of no volatility) the delta would be 1, but that is not the case of course.
I would look at the implied odds of 50% and the price of the option and assess my risk. Is it fair? Is it in my wheelhouse for risk-taking? Without considering the chart/technicals yet, I can determine my risk based on the delta of the option. This is a good start for option players.