# Rho

### Meaning of Rho

Rho measures the change in Options price with unit change in rate of interest. If Rho of Put Options is -3.87 that signify that for each unit increase in interest rate, Put Option price will decrease by 3.87.

### Important Points for Rho

- Rho of Call Option is always positive and Rho of Put Option is Negative.
- Rho of Call and Put Option is different.
- Rho is highest at ATM and decreases as Underlying moves away.
- Rho of Future is 0.

### RHO with respect to change in SPOT PRICE:

**Observations: **As spot price increases

- Call premium increases and Put premium decreases.
- Call Delta increases and Put Delta decreases.
- Gamma is at peak at ATM and decreases as UNDERLYING moves away.
- Vega is at peak at ATM and decreases as UNDERLYING moves away.
- Theta is at peak at ATM and decreases as UNDERLYING moves away.
- Call Rho increases and Put Rho decreases.

### RHO with respect to change in STRIKE PRICE:

**Observations: **As Strike price Increases

- Call premium Decreases and Put Premium Increases.
- Call Delta Decreases and Put Delta Increases.
- Gamma is at peak at ATM and decreases as UNDERLYING moves away.
- Vega is at peak at ATM and decreases as UNDERLYING moves away.
- Theta is at peak at ATM and decreases as UNDERLYING moves away.
- Call Rho decreases and Put Rho increases.

### RHO with respect to change in DAYS TO EXPIRY:

**Observations: **As days to expiry decreases / time increases

- Both Call and Put Premium decreases.
- Call Delta decrease and Put Delta increases (Both move towards 0.5).
- ATM Gamma increases.
- ATM Vega decreases.
- ATM Theta increases.
- ATM Call and Put Rho decrease.

### RHO with respect to change in VOLATILITY:

**Observations: **As Volatility increases

- Both Call and Put Premium increases.
- Call Delta increases and Put Delta decreases.
- ATM Gamma decreases.
- ATM Vega decreases.
- ATM Theta increases.
- ATM Call Rho decreases and Put Rho increases.

### RHO with respect to change in RATE OF INTEREST:

**Observations : **As Rate of Interest increases

- Call Premium increases and Put Premium decreases.
- Call Delta increases and Put Delta decreases
- ATM Gamma decreases.
- ATM Vega decreases.
- ATM Call Theta increases and Put theta decreases
- ATM Call Rho increases and Put Rho decreases.