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greeks, delta, gamma, nu, vega, alpha, beta, options, investing

Greek letters not associated with options trading.

I’m working on a book about options trading while also doing the blogathon, possibly because I am insane, but the good news is that there is overlap. Today, it’s a summary of the Greeks for options.

Options traders use Greek letters to explain different concepts because Greek letters are used to represent variables in mathematics. And here’s the thing: options valuation is mathematical. Many options strategists and traders have advanced math backgrounds; others have the kind of brain that would take to advanced math is they had studied it.

Here’s the summary of the letter and the concept:


Letter Greek Definition
Alpha Α, α Return that is not explained by risk
Beta Β, β Return based on systematic risk
Gamma Γ, γ How delta changes with underlying price
Delta Δ, δ How option price changes with changes in the underlying price
Theta Θ, θ Relationship of option price to time
Nu (Vega) Ν, ν Relationship of option price to volatility
Rho Ρ, ρ Relationship of option price to interest rates