Rho: The Forgotten Greek
Rho measures the sensitivity of option prices to changes in interest rates.
Why it's Less Important
Unlike Nifty (which moves every second) or Time (which moves every day), Interest Rates usually change only once
every few months (RBI Policy).
So for Intraday or Weekly traders, Rho is negligible.
The Theory
If interest rates rise:
- Call Options: Value Increases slightly.
- Put Options: Value Decreases slightly.
This is because higher interest rates make holding cash more valuable, affecting the cost-of-carry model for calculating futures/options pricing.
Summary of The Greeks (Module 2)
You have mastered the Engine Room!
Delta
Direction
Theta
Time
Gamma
Acceleration
Vega
Volatility
*Disclaimer: NSE/BSE frequently revise Lot Sizes and Expiry Days (e.g., SEBI Circulars 2024/2025). Always check the latest circular on nseindia.com before trading.
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