Thread by @wealthcoachmak

Looking to sell Options?

Like Covered Calls or Cash Secured Puts?

Then knowing the Greeks can help you make more informed decisions

The Greeks are a set of metrics that measure different aspects of options contracts

A brief thread 🧵 on the Greeks

👇👇👇

#OptionsTrading… twitter.com/i/web/status/1…

What is Delta?

Delta measures how much the price of an option changes in relation to a change in the price of the underlying asset

A high delta means the option is more sensitive to changes in the underlying asset's price

What is Theta?

Theta measures how much the price of an option declines as time passes

It's also known as the "time decay" of an option

A high theta means the option's value will decrease rapidly as time passes

What is Gamma?

Gamma measures how much delta changes as the price of the underlying asset changes

It's a measure of the rate of change in delta

A high gamma means delta can change quickly

What is Vega?

Vega measures how much the price of an option changes in relation to changes in volatility

A high vega means the option is more sensitive to changes in volatility

What is Rho?

Rho measures how much the price of an option changes in relation to changes in interest rates

A high rho means the option's value will increase as interest rates rise

To summarize:

The Greeks are important when trading options because they provide a way to measure and understand the risk and potential returns of different options strategies

Each Greek metric (Delta, Gamma, Theta, Vega, Rho) measures a different aspect of an option's behavior