Rho

Options glossary · how much an option's price changes when interest rates move 1 point

Rho measures sensitivity to the risk-free interest rate: how much an option's price changes when rates move by one percentage point. Calls have positive rho and puts negative, because a higher rate slightly raises the cost of carrying the stock, which feeds into option prices through the discounting term.

Rho is the quiet Greek. For the short-dated options most retail traders hold, it barely moves the needle compared with delta, theta, and vega. It matters more for long-dated options (LEAPS) and in environments where rates swing quickly.

Worked number. The default $105 call (stock $100, 45% IV, 30 days) has a rho of about $0.029 per point. Lifting the rate from 4.5% to 5.5% nudges the price from $3.27 to about $3.30, a change most traders never notice.

See it in the calculator → Load this scenario and change any input to watch rho update live.

FAQ

Should I worry about rho?

Usually not for short-dated options; its effect is tiny next to the other Greeks. It becomes relevant for long-dated positions like LEAPS or when interest rates are moving sharply.

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