Options Greeks Cheat Sheet for Beginners

This is your one-page reference for understanding the five options Greeks. Each Greek measures a different risk dimension of your options position.

Delta (Δ) — Directional Exposure

What it measures: How much the option price changes when the stock moves $1.

Range: Calls: 0 to +1.0. Puts: -1.0 to 0.

Quick rules:

  • 0.50 delta = at the money, moves $0.50 per $1 stock move
  • Delta ≈ probability of finishing ITM
  • Portfolio delta = your equivalent share exposure
  • Positive delta = bullish. Negative delta = bearish.

    • Example: You own 3 call contracts at 0.40 delta. Your position delta = +120 (3 × 100 × 0.40). This behaves like owning 120 shares.

    Gamma (Γ) — Rate of Delta Change

    What it measures: How much delta changes when the stock moves $1.

    Key facts:

  • Highest at the money, near expiration
  • Long options = positive gamma (winners accelerate)
  • Short options = negative gamma (losers accelerate)
  • Gamma is the source of risk for premium sellers near expiration

    • Example: A call with 0.50 delta and 0.04 gamma. After a $2 stock rally, delta is now approximately 0.58. After a $2 drop, delta is approximately 0.42.

    Theta (Θ) — Time Decay

    What it measures: How much the option loses per day from time passing.

    Key facts:

  • Always negative for long options (time works against buyers)
  • Highest for ATM options
  • Accelerates in the last 30 days, especially the last week
  • Theta is your "daily rent" if buying, your "daily income" if selling

    • Example: An option with -$0.08 theta loses $8 per contract per day, all else equal.

    The decay schedule:

    | Period | % of Total Decay | First half of option's life~33% Last half~67% Last 30 days~50% of total | Last 7 days | ~18% of total |

    Vega (ν) — Volatility Sensitivity

    What it measures: How much the option price changes when implied volatility moves 1%.

    Key facts:

  • Highest for ATM, long-dated options
  • Long options = positive vega (benefit from IV increase)
  • Short options = negative vega (benefit from IV decrease)
  • Vega is why option buyers lose on "correct" directional trades during IV crush

    • Example: An option with 0.12 vega gains $12/contract when IV rises 1% and loses $12/contract when IV drops 1%.

    Rho (ρ) — Interest Rate Sensitivity

    What it measures: How much the option price changes when interest rates move 1%.

    Key facts:

  • Calls have positive rho (benefit from rate increases)
  • Puts have negative rho
  • Negligible for short-dated options
  • Matters for LEAPS (1-2 year expirations)

    • Greeks Interaction Table

    | I want to... | Key Greek | What to look for | Buy directional calls/putsDeltaHigher delta = more directional exposure Sell premium for incomeThetaHigher theta = more daily income Trade around earningsVegaShort vega profits from IV crush Manage risk near expirationGammaHigh gamma = wild delta swings | Hold LEAPS in rate cycle | Rho | Rising rates help calls, hurt puts |

    How Greeks Change Together

    Greeks don't operate in isolation. They interact:

  • As time passes: Theta accelerates, gamma increases for ATM options, vega decreases
  • As stock moves toward your strike: Delta increases, gamma peaks, theta increases
  • As IV rises: Vega impact increases, delta moves toward 0.50 for all strikes (probabilities spread out)

    • Quick Decision Framework

    Before any trade, check:

  • What's my delta? (Am I directionally exposed, and how much?)
  • What's my theta? (Am I paying or collecting daily?)
  • What's my vega? (Am I exposed to IV changes, like earnings?)
  • What's my gamma? (How quickly will my position change if the stock moves?)

    • OptionsPilot displays all Greeks for each position in your portfolio, making it easy to monitor your aggregate exposure across delta, gamma, theta, and vega without manual calculation.