Option Greeks in Depth
To truly master options, one must understand the Greeks. These mathematical tools describe how options react to different market factors.
Delta (Δ) – Price Sensitivity
Measures how much an option price changes if stock moves ₹1.
Call options: Delta between 0 and +1.
Put options: Delta between 0 and -1.
Example: If a call has delta = 0.5, and stock rises ₹10, option rises ₹5.
Gamma (Γ) – Acceleration of Delta
Delta itself changes as stock moves. Gamma measures this.
High gamma = higher sensitivity, riskier.
Near expiry, gamma becomes extreme.
Theta (Θ) – Time Decay
Options lose value as time passes (all else equal).
Theta tells how much an option loses daily.
Example: If theta = -5, option loses ₹5/day.
Sellers love theta (they earn decay). Buyers fear it.
Vega (ν) – Volatility Sensitivity
Measures how option reacts to 1% change in volatility.
High volatility = high premium.
Example: If Vega = 10, and implied volatility rises 1%, option price rises ₹10.
Rho (ρ) – Interest Rate Sensitivity
Measures impact of interest rate changes.
Less important in short-term trading.
📌 Takeaway: Greeks are like the dashboard of a car. Without them, you’re driving blind.
To truly master options, one must understand the Greeks. These mathematical tools describe how options react to different market factors.
Delta (Δ) – Price Sensitivity
Measures how much an option price changes if stock moves ₹1.
Call options: Delta between 0 and +1.
Put options: Delta between 0 and -1.
Example: If a call has delta = 0.5, and stock rises ₹10, option rises ₹5.
Gamma (Γ) – Acceleration of Delta
Delta itself changes as stock moves. Gamma measures this.
High gamma = higher sensitivity, riskier.
Near expiry, gamma becomes extreme.
Theta (Θ) – Time Decay
Options lose value as time passes (all else equal).
Theta tells how much an option loses daily.
Example: If theta = -5, option loses ₹5/day.
Sellers love theta (they earn decay). Buyers fear it.
Vega (ν) – Volatility Sensitivity
Measures how option reacts to 1% change in volatility.
High volatility = high premium.
Example: If Vega = 10, and implied volatility rises 1%, option price rises ₹10.
Rho (ρ) – Interest Rate Sensitivity
Measures impact of interest rate changes.
Less important in short-term trading.
📌 Takeaway: Greeks are like the dashboard of a car. Without them, you’re driving blind.
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Hello Everyone! 👋
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Powiązane publikacje
Wyłączenie odpowiedzialności
Informacje i publikacje przygotowane przez TradingView lub jego użytkowników, prezentowane na tej stronie, nie stanowią rekomendacji ani porad handlowych, inwestycyjnych i finansowych i nie powinny być w ten sposób traktowane ani wykorzystywane. Więcej informacji na ten temat znajdziesz w naszym Regulaminie.