Options Greeks Explained

The Greeks measure how option prices change based on various factors. Understanding them is essential for options trading.

Delta (Δ)

Want to apply this to your own portfolio?Open OptionsPilot →

What it measures: How much option price changes per $1 move in stock

  • Call delta: 0 to 1.0
  • Put delta: 0 to -1.0
  • ATM options: ~0.50/-0.50

    • For covered calls: Lower delta = less assignment risk

    Theta (Θ)

    What it measures: How much option price decreases per day (time decay)

  • Always negative for option buyers
  • Accelerates as expiration approaches
  • Highest for ATM options

    • For sellers: Theta is your friend—you profit from time decay

    Gamma (Γ)

    What it measures: How much delta changes per $1 move in stock

  • Highest for ATM options near expiration
  • Causes delta to change rapidly

    • For sellers: High gamma = position can move against you quickly

    Vega (ν)

    What it measures: How much option price changes per 1% change in implied volatility

  • Higher for longer-dated options
  • Higher for ATM options

    • For sellers: High IV = more premium but more risk