Greeks

I'm your host, Steve.

Today, I'm joined by Richard King, co-founder of Leaps Finance, the Solana Options Protocol from RPS Labs, paying premiums upfront with no Greeks required.

Richard, welcome to The Index.

Hey, thanks for having me.

Let's put it that way.

So leave space the option premium upfront instead of accruing it over the positions life.

Why does removing the Greeks from the user experience matter more than most traders assume?

Yeah, whenever you Google the options or go to YouTube and say, how do options work? The second or third video is going to start talking about the Greeks like Delta, Gamma, Vega, Theta, all these different Greek letters.

The strike is that agreed price, the expiration tells you how long the agreement lasts, and the premium tells you what the agreement costs.

Once those pieces are second nature, then we can start talking about why implied volatility matters so much, what the Greeks measure, and how professional traders decide whether buying or selling an option offers positive expected value.

For now, thank you for watching, hit that subscribe button, and if you enjoyed this video, check out this one on my four golden rules for selling options.

It's a derivative of another instrument.

Ensuring that you understand the Greeks and how the underlying instrument and vol in general is impacting the pricing of the option is very important.

So while we have the common approach to execution, having the understanding of each underlying instrument is key.

All right.

Code no longer protects anyone.

The software I've built includes a program that manages the terminals where I run my AI agents, an AI-powered native Mac app that labels my email, answers IT AND sets up meetings, and a program that pulls data straight from NASDAQ and analyzes entire options chains, Greeks included, to find the best contracts and tell me whether they're actually worth trading.

I used to pay a subscription for every one of those, and now I build them myself.

If someone like me, with no programming background, can build those tools, polish them to my liking and get them running, don't you think any company could? And what happens when every company embraces AI and nobody outsources software anymore? Plenty of companies will drop HubSpot the day 300 extra leads push its account into a higher contact tier and a bigger monthly bill.

Is there a difference between Vega and IV? I thought they were the same thing.

But then you said if you don't understand the Greeks separate from IV.

So Vega and implied volatility are not the same thing.

They are related.

So Vega is one of the option Greeks.

It is one of the important components of options pricing.

Well, let's actually talk about this.

Implied volatility dropping hurts your position.

You have to monitor the higher dimensions of risk.

We need to introduce the learner to the third and fourth dimensions of the Greeks.

We already established Vega, which measures sensitivity to implied volatility, the second moment of the distribution.

But then you have Vanna, the third moment, and Volga, the fourth moment.

We need to slow down here and dedicate some real time to these because these higher Greeks are where retail traders get completely lost.

Let's start with Vanna.

What is the third moment of risk?

It's calculus applied to human emotion.

Two more items on the calendar and the tape.

Greeks dot live says one point four seven billion dollars of Bitcoin options expire today with max pain at eighty-three thousand dollars.

Max pain is the price where the most options expire worthless, and prices sometimes drift toward it into expiry.

And one trader is leaning in.

It's mainly written for people new to options trading because I cover the absolute basics.

Long puts, long calls, short puts, short calls, exercise and assignment, the basic of the Greeks, delta, theta, vega, especially those three, how they affect options pricing.

I explain everything Or the layman, you know, somebody that's brand new to this stuff.

So it's a really good book for the new options trader or even the intermediate options trader.

Extrinsic value is what the market is assigning to that remaining amount of uncertainty that's built in there.

And I like to think of the Greeks, when we talk about the Greeks, as a dashboard for that bundle of risks.

Delta is one of those Greeks, right? We talk about that all the time.

That tells you how sensitive that option is to movement in the underlying.

Gamma tells you how quickly that delta can change.

It tells you how much that thing should decay over a 24-hour period of time.

And implied volatility tells you something about the volatility assumption that's embedded in that option price.

None of those metrics that I just talked about, none of those Greeks are the premium all by itself, right? They are all ways to measure that premium, and they're ways of understanding why that premium moves around and why it behaves the way that it does.