Options Greeks

What are the Options Greeks?

Option Greeks essentially are measures of various sensitivities of an option’s price. They measure different factors that will affect the price of an option and will help you understand what is going on at a deeper level.

It is important to understand what the Greeks are, with this data you can make more informed decisions on trades and positions alike. At this stage, we will concentrate on understanding the big 5 which option traders collectively refer to as the Greeks – Delta, Gamma, Theta, Vega and Rho.

An Overview of the Greeks

How can Options Greeks help me?

Compare using Greeks in your options trading to a pilot looking to plan a flight. They will prepare by looking at weather, wind speeds, altitude and cloud cover to name a few before making any decisions on a flight path. Like this, the Greeks can help you make more informed decisions about which options to trade and when to trade them, better understanding the risks and potential rewards. 

Please note that Greeks are theoretical and are based on mathematical models, and therefore they should be considered accordingly.