How do the greeks add up to one position’s risk?
What are the greeks for?
The greeks are the numbers describing how an option price reacts to each input: delta to the underlying, gamma to the change in delta, theta to time, vega to implied volatility, rho to interest rates. They hold for small changes and shift themselves as soon as the market moves.
The signs flip with your side
Every greek of an option you bought has the opposite sign for the trader who sold it. A long put carries negative delta, positive gamma, negative theta and positive vega; the short put holds positive delta, negative gamma, positive theta and negative vega. Reading a position starts with the side: the same option is a bet on a falling price and rising volatility for one party, and on the opposite for the other.
Scaling to the position
Quoted greeks are per share. Multiply by 100 for one standard contract and by the number of contracts, then add up the legs. A spread’s net delta can be small even when each leg is large, because long and short legs offset each other. The sum is what the account actually carries: a position delta of minus 49 behaves, for small moves, roughly like being short 49 shares.
Which one dominates when
Far from expiration, delta and vega usually drive the daily result: a move in the stock or in implied volatility outweighs a day of decay. Close to expiration and near the strike, gamma and theta take over — the option reacts sharply to small moves and loses value quickly. Rho, the rate sensitivity, matters mostly on long-dated options. Delta, gamma, theta and vega each have their own page; this one is about reading them together.
The common misreading
The greeks are often treated as fixed properties of a trade. They are snapshots from a model and hold only for small changes from the current state. After a large move, a jump in volatility or a few days of decay, every one of them has a new value, and a position that looked balanced at the open can carry a clear directional lean by the close. Recheck them whenever something material changes.
Worked example
Hypothetical numbers for illustration, not a market quote and not a recommendation.
An example stock trades at 100 €. A long 100 € put with 30 days left, at an implied volatility of 25 % and a rate of zero, is worth 2.86 € in the Black-Scholes model. Its delta is −0.49, gamma 0.056, theta −0.048 per day and vega 0.114 per volatility point.
For one contract that is −49 deltas, about −4.76 € of theta per day and about 11.43 € of vega per point. The seller of the same put holds the opposite signs: +49 deltas, +4.76 € of theta and −11.43 € of vega. Fees are ignored.
Strategies where the term matters
- Covered Call — Are you willing to hand over the shares at the call strike - even if they keep running afterwards?
- Short Iron Condor — Is the range you expect genuinely narrower than the move the market has priced in?
- Long Straddle — Does the move have to be bigger than the one the market has already priced in?
Calculators for this term
Track it in your journal
Related terms
Every term in one place: the options glossary.
This material is general information about option strategies, written for a general audience. It is not investment advice, not a recommendation, and not financial analysis. Options can lose their entire value, and uncovered positions can lose more than the amount committed. Anything said about tax is general in nature and is no substitute for professional tax advice. Last reviewed: 2026-08-06.