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Rho




Rho is the measure of the sensitivity of the option to changes in interest rates.

When interest rates are low, rho is not nearly as necessary to track as it is when interest rates are higher or when they are in a position to be moving higher. Interest is an issue with options because the value of the money not yet committed to the underlying asset during the life of the option.


Additional Comments:

Rho is most important to long-term options or LEAPS (Long- Term Equity Anticipation Securities) because the value of the unspent capital is more significant over time.

Related Terms:

Treasury Bond
U.S. Treasury bonds, also known as long bonds, are issued in 30-year terms.The T-bond is ...

LEAPS
Long-Term Equity Anticipation Securities - or LEAPS - are call or put options that can be ...

Theta
(decay) - The sensitivity of an option price to the variable of time to Expiration. Remember ...





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