Options Greeks Explained Simply
Understand Delta, Gamma, Theta, Vega, and Rho - the 5 most important metrics for successful options trading. With examples, visualizations, and practical tips.
Greeks CalculatorDelta (Δ)
How much the option price changes when the underlying stock price moves by €1.
Range
Call: 0 to 1 | Put: 0 to -1
Example
Delta 0.60 means: Stock up €1 → Option up €0.60
Practical Tip:
Delta also shows the probability that the option will expire ITM. Delta 0.70 = ~70% probability.
Typical Delta Values
| Position | Call Δ | Put Δ |
|---|---|---|
| Deep ITM | ~0.90 | ~-0.90 |
| ATM | ~0.50 | ~-0.50 |
| OTM | ~0.20 | ~-0.20 |
Gamma (Γ)
How fast Delta changes when the stock price moves by €1. The "acceleration" of your Delta.
Range
Always positive (0 to ~0.20)
Example
Delta 0.50, Gamma 0.05: Stock up €1 → new Delta 0.55
Practical Tip:
Gamma is highest for ATM options near expiration. High Gamma = fast Delta changes (good or bad!).
Gamma Over Time
| 90 DTE | Low (0.01) |
| 30 DTE | Medium (0.05) |
| 7 DTE | High (0.15) |
Theta (Θ)
How much value the option loses per day due to time decay. The "enemy" of option buyers.
Range
Always negative for long positions
Example
Theta -0.10 means: Option loses €10 per day (per contract)
Practical Tip:
Theta accelerates exponentially in the final 30 days. Option sellers benefit from Theta (positive Theta).
Theta Acceleration
| Time Left | Daily | Weekly |
|---|---|---|
| 90 DTE | €0.02 | €0.14 |
| 30 DTE | €0.08 | €0.56 |
| 7 DTE | €0.30 | €2.10 |
Vega (ν)
How much the option price changes when implied volatility moves by 1%.
Range
Always positive (0 to ~0.50)
Example
Vega 0.15 means: IV up 10% → Option up €1.50
Practical Tip:
Vega is highest for ATM options with long expiration. Before earnings IV rises (expensive options), after earnings IV falls (IV crush).
IV Scenarios
| Before Earnings | +20% | Options +expensive |
| After Earnings | -30% | IV Crush |
| Quiet Period | ±5% | Stable |
Rho (ρ)
How much the option price changes when the risk-free interest rate changes by 1%.
Range
Call: positive | Put: negative
Example
Rho 0.05 means: Interest rates up 1% → Call up €0.05
Practical Tip:
Rho is the least important Greek for most traders. Only relevant for LEAPS (long-term options >1 year).
Greeks in Practice
For Option Buyers (Long)
Delta:
Choose Delta >0.50 for higher probability. ATM or slightly ITM options.
Theta:
Avoid options with less than 30 days to expiration. Theta accelerates too much.
Vega:
Buy when IV is low (IV Rank <30). Avoid buying before earnings.
For Option Sellers (Short)
Theta:
Sell options with 30-45 days to expiration. Maximum Theta efficiency.
Vega:
Sell when IV is high (IV Rank >70). Collect inflated premiums.
Gamma:
Avoid selling ATM options near expiration (high Gamma risk).
Frequently Asked Questions
Which Greek is most important?
There's no "most important" Greek - all matter for different purposes. Delta shows your directional risk, Theta your time decay, Vega your volatility risk. For beginners: Focus on Delta (direction), Theta (time), and Vega (volatility).
How do I calculate the Greeks?
You don't need to calculate Greeks manually - every modern trading platform displays them automatically. Use our P/L Calculator to see all Greeks for your position. Calculation uses the Black-Scholes model.
Why is Theta always negative for long options?
Because options have an expiration date. Every day that passes, the option loses time value. It's like a melting ice cube - time works against you. Option sellers have positive Theta because they profit from this time decay.
What is IV crush and how does it relate to Vega?
IV crush happens when implied volatility drops quickly (usually after earnings). If you have high Vega and IV falls 30%, your option loses massive value - even if stock price goes your way! Example: Vega 0.20, IV drops 30% = -€6 loss per contract.
Should I buy options with high or low Gamma?
Depends on your strategy. High Gamma (ATM, short expiration) = fast Delta changes = big wins OR big losses. Low Gamma (ITM/OTM, long expiration) = stable Delta = more predictable price moves. For beginners: medium Gamma is best.
Visualize Your Greeks
Use our P/L Calculator to see all Greeks for your position.
Go to P/L Calculator