Rho (Options Greek) Calculator

✖Change in Option Premium refers to the fluctuation in the price of an options contract due to alterations in factors such as the underlying asset's price, implied volatility, or interest rates.ⓘ Change in Option Premium [ΔV]			+10% -10%
✖Change in Rate of Interest denotes fluctuations in the cost of borrowing money or the return on investments, impacting financial markets and asset valuations.ⓘ Change in Rate of Interest [Δr]			+10% -10%

✖Rho denotes the sensitivity of an option's price to changes in interest rates, indicating how much the option's value will change for a one percent change in interest rates.ⓘ Rho (Options Greek) [ρ]

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Formula

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Rho (Options Greek)

Formula

`"ρ" = "ΔV"/"Δr"`

Example

`"1.666667"="2.5"/"1.5"`

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Rho (Options Greek) Solution

STEP 0: Pre-Calculation Summary

Formula Used

Rho = Change in Option Premium/Change in Rate of Interest
ρ = ΔV/Δr
This formula uses 3 Variables

Variables Used

Rho - Rho denotes the sensitivity of an option's price to changes in interest rates, indicating how much the option's value will change for a one percent change in interest rates.
Change in Option Premium - Change in Option Premium refers to the fluctuation in the price of an options contract due to alterations in factors such as the underlying asset's price, implied volatility, or interest rates.
Change in Rate of Interest - Change in Rate of Interest denotes fluctuations in the cost of borrowing money or the return on investments, impacting financial markets and asset valuations.

STEP 1: Convert Input(s) to Base Unit

Change in Option Premium: 2.5 --> No Conversion Required
Change in Rate of Interest: 1.5 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

ρ = ΔV/Δr --> 2.5/1.5

Evaluating ... ...

ρ = 1.66666666666667

STEP 3: Convert Result to Output's Unit

1.66666666666667 --> No Conversion Required

FINAL ANSWER

1.66666666666667 ≈ 1.666667 <-- Rho

(Calculation completed in 00.004 seconds)

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Created by Keerthika Bathula

Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad

Keerthika Bathula has created this Calculator and 50+ more calculators!

Verified by Nayana Phulphagar

Institute of Chartered and Financial Analysts of India National college (ICFAI National College), HUBLI

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< 20 International Finance Calculators

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Go FRA Payoff = Notional Principal*(((Underlying Rate at Expiration-Forward Contract Rate)*(Number of Days in Underlying Rate/360))/(1+(Underlying Rate at Expiration*(Number of Days in Underlying Rate/360))))

Put-Call Parity

Go Call Option Price = Spot Price of Underlying Asset+Put Option Price-((Strike Price)/((1+(Risk-Free Rate of Return/100))^(No. of Months/12)))

Optimal Hedge Ratio

Go Optimal Hedge Ratio = (Standard Deviation of Changes in Spot Price/Standard Deviation of Changes in Futures Price)*Correlation of Changes in Spot and Futures Prices

Option Premium

Go Option Premium = ((Share Option Warrant/Number of Securities Per Option Warrant)+(Purchase Price*100/Price Security-100))

Balance of Financial Account

Go Balance of Financial Account = Net Direct Investment+Net Portfolio Investment+Asset Funding+Errors and Omissions

Annualised Forward Premium

Go Annualised Forward Premium = (((Forward Rate-Spot Rate)/Spot Rate)*(360/No. of Days))*100

Balance of Capital Account

Go Balance of Capital Account = Surpluses or Deficits of Net Non-Produced+Non-Financial Assets+Net Capital Transfers

Current Account Balance

Go Current Account Balance = Exports-Imports+Net Income Abroad+Net Current Transfers

Uncovered Interest Rate Parity

Go Expected Future Spot Rate = Current Spot Exchange Rate*((1+Domestic Interest Rate)/(1+Foreign Interest Rate))

Covered Interest Rate Parity

Go Forward Exchange Rate = (Current Spot Exchange Rate)*((1+Foreign Interest Rate)/(1+Domestic Interest Rate))

International Fisher Effect using Interest Rates

Go Change in Exchange Rate = ((Domestic Interest Rate-Foreign Interest Rate)/(1+Foreign Interest Rate))

Optimal Number of Contracts

Go Optimal Number of Contracts = (Optimal Hedge Ratio*Number of Positions Hedged)/Futures Contract Size

Relative Strength Index

Go Relative Strength Index = 100-(100/(1+(Average Gain during Up Period/Average Loss during Down Period)))

Bid Ask Spread

Go Bid Ask Spread = ((Ask Price-Bid Price)/Ask Price)*100

International Fischer Effect using Spot Rates

Go Change in Exchange Rate = (Current Spot Exchange Rate/Spot Rate in Future)-1

Vega (Options Greek)

Go Vega = Change in Option Premium/Change in Volatility of Underlying Asset

Theta

Go Theta = -Change in Option Premium/Change in Time to Maturity

Gamma

Go Gamma = Change in Delta/Change in Price of Underlying Asset

Rho (Options Greek)

Go Rho = Change in Option Premium/Change in Rate of Interest

Hedge Ratio

Go Hedge Ratio = Hedge Value/Total Position Value

Rho (Options Greek) Formula

Rho = Change in Option Premium/Change in Rate of Interest
ρ = ΔV/Δr

What is Rho (Options Greek) ?

Rho, in options Greek, signifies the sensitivity of an option's price to changes in interest rates. It quantifies how much an option's value will change for a one percent increase or decrease in interest rates, assuming all other factors remain constant. Rho is particularly relevant in situations where interest rates are expected to fluctuate significantly, as it helps options traders and investors assess the impact of these changes on option prices. Understanding Rho enables market participants to make informed decisions about their options positions, especially in environments where interest rate movements can significantly affect the profitability and risk of options strategies.

How to Calculate Rho (Options Greek)?

Rho (Options Greek) calculator uses Rho = Change in Option Premium/Change in Rate of Interest to calculate the Rho, The Rho (Options Greek) denotes the sensitivity of an option's price to changes in interest rates, indicating how much the option's value will change for a one percent change in interest rates. Rho is denoted by ρ symbol.

How to calculate Rho (Options Greek) using this online calculator? To use this online calculator for Rho (Options Greek), enter Change in Option Premium (ΔV) & Change in Rate of Interest (Δr) and hit the calculate button. Here is how the Rho (Options Greek) calculation can be explained with given input values -> 1.666667 = 2.5/1.5.

FAQ

What is Rho (Options Greek)?

The Rho (Options Greek) denotes the sensitivity of an option's price to changes in interest rates, indicating how much the option's value will change for a one percent change in interest rates and is represented as ρ = ΔV/Δr or Rho = Change in Option Premium/Change in Rate of Interest. Change in Option Premium refers to the fluctuation in the price of an options contract due to alterations in factors such as the underlying asset's price, implied volatility, or interest rates & Change in Rate of Interest denotes fluctuations in the cost of borrowing money or the return on investments, impacting financial markets and asset valuations.

How to calculate Rho (Options Greek)?

The Rho (Options Greek) denotes the sensitivity of an option's price to changes in interest rates, indicating how much the option's value will change for a one percent change in interest rates is calculated using Rho = Change in Option Premium/Change in Rate of Interest. To calculate Rho (Options Greek), you need Change in Option Premium (ΔV) & Change in Rate of Interest (Δr). With our tool, you need to enter the respective value for Change in Option Premium & Change in Rate of Interest and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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