What is option greek in trading ?

Option Greeks

Option Greeks are key metrics used to measure the sensitivity of an option’s price to various factors. They help traders understand the risks and potential rewards involved in options trading.

The Main Option Greeks:

What It MeasuresWhat It Means for Traders
Delta (Δ)How much the option price changes with a $1 move in the underlying asset

Shows directional risk; e.g., Delta = 0.5 means option price moves $0.50 if the underlying moves $1


Gamma (Γ)


Rate of change of Delta for a $1 move in the underlying assetMeasures stability of Delta; high Gamma means Delta changes rapidly, more sensitivity


Theta (Θ)


Time decay — how much the option price decreases as time passesOptions lose value as expiration approaches; Theta tells you how fast

Vega (ν)


Sensitivity to volatility changes in the underlying asset

Higher volatility usually increases option price; Vega measures this effect

Rho (ρ)Sensitivity to interest rate changesImpact of interest rate changes on option price (less important for most traders)

Why Are Option Greeks Important?

  • Help you manage risk in options positions.

  • Allow better pricing and hedging decisions.

  • Provide insight into how option value changes with market moves.

Quick Example:

If you hold a call option with:

  • Delta = 0.6

  • Underlying stock price rises $1

The option price is expected to increase by about $0.60.

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