The 6-Week Options Trading Kickstarter: Meet the Greeks!
Steve Smith breaks down delta, theta, vega, gamma, and rho.
Rho is the expected change in an option's price for every one-unit change in interest rates. With rates near zero and not going much higher for the foreseeable future, this will not have much of an impact on options pricing.
Gamma is the rate of change in an option's delta for every one-unit change in the price of the underlying. As such, it is a derivative of a derivative (a second derivative) and moves in miniscule increments. This can be an important tool for professionals who engage in hedging and maintaining delta-neutral positions across large multi-strike options positions, but it is beyond the scope of this series.
Here is a full schedule for The 6-Week Options Trading Kickstarter series:
1. What Are Options, and Why Should We Care About Them?
2. Option Pricing Basics
3. Meet the Greeks
4. How to use Options: Three Basic Principles
5. Covered Calls
6. Hedging, Portfolio Protection, and Avoiding Disaster
For more from Steve Smith, take a FREE 14-day trial to OptionSmith and get his specific options trades emailed to you along with exclusive access to his full portfolio. Learn more.
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