The Greeks of Option Trading Explained

Explaining the financial metrics known as the "Greeks" used by option traders to measure the factors that affect option contracts. We touch:

Delta: How much an option's price changes per dollar move in the underlying asset
Gamma: The rate of change in Delta as the stock price moves
Theta: The daily decay in option value as expiration approaches
The risks and pitfalls of short-term, out-of-the-money options trading
Call debit spreads (bull call spreads) and their advantages:
• Lower entry costs
• Defined risk
• Potentially higher profits than naked calls in most scenarios
Put credit spreads and their role in options strategies
Why understanding these Greeks is crucial for successful options trading

Disclaimer: This information is for educational purposes only. Options trading carries significant risk. Always do your own research and consider seeking advice from a licensed financial professional before trading.