# Options cheatsheet

# Options Greeks Cheat Sheet

## Implied Volatility (IV)
**What it is:** The market's expectation of how much the stock price will move over the next year, expressed as a percentage.

| Value | What it means |
|-------|--------------|
| 0–20% | Low volatility — stock expected to be calm |
| 20–50% | Normal range for most stocks |
| 50–80% | High volatility — big moves expected |
| 80%+ | Extreme volatility — options are expensive |

> **Your WD put:** IV = 93% → Market expects massive swings. Options are pricey.

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## Delta (Δ)
**What it is:** How much the option's price moves when the stock moves **$1**.

| Value | What it means |
|-------|--------------|
| 0.00 to +1.00 | Calls — rises when stock rises |
| 0.00 to −1.00 | Puts — falls when stock rises |
| ±0.50 | Roughly 50/50 chance of expiring in the money |
| ±0.80–1.00 | Deep in the money — moves almost like the stock |
| ±0.01–0.10 | Far out of the money — very unlikely to profit |

> **Your WD put:** Delta = −0.0805 → For every $1 WD rises, your put loses ~$0.08. For every $1 WD falls, your put gains ~$0.08.

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## Gamma (Γ)
**What it is:** How much **delta itself changes** when the stock moves $1. Think of it as delta's sensitivity.

| Value | What it means |
|-------|--------------|
| High (0.05+) | Delta changes rapidly — option is very sensitive to price moves |
| Low (0.001–0.005) | Delta barely changes with price moves |
| Near expiration | Gamma spikes dramatically |

> **Your WD put:** Gamma = 0.0002 → If WD drops $1, delta moves from −0.0805 to about −0.0807. Very small — you're far out of the money.

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## Theta (Θ)
**What it is:** How much value the option **loses each day** just from time passing, assuming the stock price stays flat. Always negative for buyers.

| Value | What it means |
|-------|--------------|
| −0.01 to −0.05 | Slow decay — often far from expiration |
| −0.05 to −0.20 | Moderate decay |
| −0.20+ | Fast decay — usually near expiration or high IV |

> **Your WD put:** Theta = −0.1049 → You lose ~$10.49 per day (×100 shares per contract) just from time passing. Over 30 days = ~$314 lost to time decay alone.

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## Vega (ν)
**What it is:** How much the option's price changes when **IV moves 1%**.

| Value | What it means |
|-------|--------------|
| High (0.50+) | Very sensitive to volatility changes |
| Low (0.01–0.10) | Less affected by volatility shifts |
| Long options | You benefit when IV rises |
| Short options | You benefit when IV falls |

> **Example:** If your option has a Vega of 0.30 and IV jumps from 93% to 94%, the option gains $0.30 in value (×100 = $30 per contract).

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## Rho (ρ)
**What it is:** How much the option's price changes when **interest rates move 1%**. Usually the least important Greek for short-term traders.

| Value | What it means |
|-------|--------------|
| Positive (calls) | Rising rates slightly increase call value |
| Negative (puts) | Rising rates slightly decrease put value |
| Near zero | Short-dated options barely affected |

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## Quick Reference: Your WD Put ($300 Strike, Jan 2028)

| Greek | Your Value | Plain English |
|-------|-----------|---------------|
| IV | 93% | Market expects huge moves — option is expensive |
| Delta | −0.0805 | Gains ~$8 per contract for every $1 WD falls |
| Gamma | 0.0002 | Delta barely changes — you're far out of the money |
| Theta | −0.1049 | Loses ~$10.49/day per contract from time alone |
| Contract cost | $6,200 | $62 quote × 100 shares |

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## Key Concepts to Remember

- **One contract = 100 shares.** Always multiply the quoted price by 100 to get your actual cost.
- **Out of the money (OTM):** The stock price hasn't reached your strike yet. For puts, this means the stock is *above* your strike price.
- **In the money (ITM):** Your option has intrinsic value. For puts, this means the stock is *below* your strike.
- **Time decay accelerates** as expiration approaches — the last 30 days are the fastest decay period.
- **IV crush:** After major news events (earnings, etc.), IV often drops sharply, taking option prices with it even if the stock moves in your favour.