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 |
