Introducing the 'greeks' of options theory

01:02 Mins Read

Options greeks may sound confusing at first. But this video will help you get started with understanding them better.

Transcript

Introducing the 'greeks' of options theory What are options Greeks? Simply put, they’re metrics that help traders better understand the risk and potential reward of an option position. There are three main Greeks that we’ll see here. First, we have an option’s Delta. Delta measures the change in an option’s premium when the price of the underlying asset changes. Then, we have an option’s Gamma. Gamma measures the rate of change of an option’s Delta over time. What about an option’s Theta, then? Well, Theta measures the decay in an option’s premium every day as the expiry gets closer. So, that brings our preview of options Greeks to a wrap. We’ll discuss these metrics in detail in the upcoming chapter on Smart Money.

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