Options Greeks Explained

Read delta, gamma, theta and vega together when reviewing option risk.

Options Greeks Explained is a 4-page PDF field guide. Delta, gamma, theta and vega with an option-risk checklist.

• Delta is local: It approximates a small price sensitivity now; it changes as price, time and volatility change.

• Gamma changes delta: Near expiration or near the strike, delta can move quickly and invalidate static assumptions.

• Theta is conditional: Time decay is not collected smoothly and can be overwhelmed by price and volatility changes.

• Vega needs a horizon: Volatility sensitivity differs by expiration, strike and position structure.

Action checklist: Check Greeks at position level; Recalculate after a material price move; Stress one day and one week forward; Model volatility expansion and contraction; Include contract multiplier in dollar risk; Treat model output as an estimate.

Greeks are model sensitivities, not promises about future profit or loss.