How exactly do you figure out the theta and the IV? I keep seeing it mentioned a lot in here and not really sure where to look for it. Any help would be appreciated.
Every brokerage platform I’ve ever used or seen others use has had this information available when you pull up an options contract or options chain. You may have to configure columns in a way to get the data you want.
Terrible_Champion298 on
These and other values are collectively referred to as the Options Greeks. Mine are supplied by my brokerage via a number of screens that allow inclusion of that information. Find if and how you get Delta, Gamma, IV, Vega, and Rho information through your brokerage. Then begin learning how they can help you make better options trading decisions. Start with Delta.
AOB23423 on
Theta/ the Greeks should be displayed at broker (either in chain or when individually selected/both). Delta/gamma/theta/vega/rho.
IV should also be in there. (Might just auto populate the 20-40day). But you should be able to adjust it if you wanted. (To calculate value vs current trading price based on your adjustment).
ScottishTrader on
No need to figure or do anything with theta so this is not needed. Theta is time decay of the extrinsic value which is not even or linear, but we know it will decay away to be zero extrinsic value at expiration. Theta decay helps short options profit and works against long options, but there is no real need to know what the value is, even though most trading platforms can show it.
IV is the amount of implied volatility and is often measured on the underlying stock. High IV means higher priced options, low IV means lower priced options. Most platforms will show IV, but that alone doesn’t tell you as much since it is not in any kind of context. Showing IV Rank or IV Percentile will show the IV as compared to the annual range.
Many use IV to find higher priced options to sell as the stock has higher IV, and to buy options if the stock has lower IV. Be aware that any stock traded will need more analysis than just IV . . .
williego on
The main option Greeks, like Delta and Theta, are derived using calculus and represent the first derivatives of the option pricing formula. Delta measures the rate of change of the option’s price with respect to changes in the underlying asset’s price, while Theta represents the rate of change in the option’s price as time passes. Gamma, on the other hand, is the second derivative of the option’s price with respect to the underlying asset’s price and measures the rate of change of Delta. Implied Volatility (IV) isn’t a Greek itself but can be inferred from the option’s price, reflecting the market’s expectation of future volatility.
mynamehere999 on
What is the question that you’re trying to answer by figuring out IV and theta?
6 Comments
Every brokerage platform I’ve ever used or seen others use has had this information available when you pull up an options contract or options chain. You may have to configure columns in a way to get the data you want.
These and other values are collectively referred to as the Options Greeks. Mine are supplied by my brokerage via a number of screens that allow inclusion of that information. Find if and how you get Delta, Gamma, IV, Vega, and Rho information through your brokerage. Then begin learning how they can help you make better options trading decisions. Start with Delta.
Theta/ the Greeks should be displayed at broker (either in chain or when individually selected/both). Delta/gamma/theta/vega/rho.
IV should also be in there. (Might just auto populate the 20-40day). But you should be able to adjust it if you wanted. (To calculate value vs current trading price based on your adjustment).
No need to figure or do anything with theta so this is not needed. Theta is time decay of the extrinsic value which is not even or linear, but we know it will decay away to be zero extrinsic value at expiration. Theta decay helps short options profit and works against long options, but there is no real need to know what the value is, even though most trading platforms can show it.
IV is the amount of implied volatility and is often measured on the underlying stock. High IV means higher priced options, low IV means lower priced options. Most platforms will show IV, but that alone doesn’t tell you as much since it is not in any kind of context. Showing IV Rank or IV Percentile will show the IV as compared to the annual range.
Many use IV to find higher priced options to sell as the stock has higher IV, and to buy options if the stock has lower IV. Be aware that any stock traded will need more analysis than just IV . . .
The main option Greeks, like Delta and Theta, are derived using calculus and represent the first derivatives of the option pricing formula. Delta measures the rate of change of the option’s price with respect to changes in the underlying asset’s price, while Theta represents the rate of change in the option’s price as time passes. Gamma, on the other hand, is the second derivative of the option’s price with respect to the underlying asset’s price and measures the rate of change of Delta. Implied Volatility (IV) isn’t a Greek itself but can be inferred from the option’s price, reflecting the market’s expectation of future volatility.
What is the question that you’re trying to answer by figuring out IV and theta?