Unit 3 · Level 1 · The greeks
Unit review: the dashboard
Delta: your direction, in share-equivalents. Theta: the daily rent. Vega: your exposure to the price of movement. Gamma: how fast delta itself reshapes. A trader who checks all four before entering knows exactly what they're long, what they're paying, and what could lurch. That's the dashboard: from here on you fly with instruments.
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What you get asked
Match each greek to its job.
One sentence per greek is all you need at this stage. Precision comes with practice on real chains.
Which greek charges a long option holder every single calendar day?
Delta, vega and gamma need the market to move; theta bills you for the passage of time alone.
A 0.30-delta call moves roughly like ___ shares per contract.
0.30 × 100 shares = 30 share-equivalents. Always size options by delta exposure, not by how small the premium feels.
You own a call. The stock rises €1, but IV falls and a day passes. What's going on in the price?
Every option P&L is a tug-of-war between the greeks. Whether you end up net positive depends on which force pulled hardest.
Taken together, the greeks tell you…
They're a risk X-ray, not a crystal ball. Next unit: using all of this to buy options well. 🐜
The rest of this unit
Delta, theta, vega, gamma: the four dials on every option's dashboard.