Level: Intermediate
I will be bringing you more advanced education blogs that are outside the scope of the club currently.
What are your Greeks? Take a peek.
Delta: Your option price moves by DELTA amount for each dollar the underlying moves. However, even delta can change…
Gamma: Your DELTA moves by GAMMA amount for each dollar the underlying moves. This is the derivative of DELTA.
Vega: Measures how much the option price moves in relation to volatility.
Theta: Each day, how much your option price decays. This could be good or bad depending on whether you are a buyer or seller.
Rho: How much the option price is affected by interest rates. Not that commonly used.
Use these in conjunction with implied volatility and theoretical pricing tools like the Black Scholes model (more on that later) for the best success in choosing strike prices and expirations.
– Michael