Option Greeks | 5 Visual Guides to Measuring Risk

Greek Pillars

In the below guides, projectfinance will teach you everything there is to know about the Greeks in options trading!

Option Greeks 101

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If you want to trade options, you must know the Greeks. The good news? They can be simplified. Delta · Gamma · Theta · Vega. 

Option Risk #1: Delta

Delta estimates an option’s price change when the stock price rises or falls by $1. In other words, delta is used to gauge an option’s directional exposure.

Option Risk #2: Gamma

An option’s directional exposure changes when the stock price shifts. Gamma estimates how much an option’s delta will change when the stock price rises or falls by $1.

Option Risk #3: Theta

The passage of time is the enemy of option buyers, and the best friend of option sellers. Theta estimates how much an option’s price will fall with each day that passes.

Option Risk #4: Vega


Implied volatility rises and falls with investor sentiment. Vega estimates an option’s price sensitivity relative to changes in implied volatility.

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Additional Resources

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About the Author

Chris Butler received his Bachelor’s degree in Finance from DePaul University and has nine years of experience in the financial markets. 

Chris started the projectfinance YouTube channel in 2016, which has accumulated over 25 million views from investors globally.

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