Options Greeks
What is Rho and how does it calculate option price sensitivity to shifts in the risk-free interest rate?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Rho measures an option's price sensitivity to a one percentage point change in the risk-free interest rate, with call rho positive and put rho negative under standard pricing models.
How it works
Rho's impact is generally small for short-dated options but becomes more meaningful for LEAPS and long-dated contracts where interest rate changes compound over a longer holding period.
An example
A LEAPS call with a rho of 0.15 would theoretically gain about $15 per contract if interest rates rose one percentage point, other factors held constant.
Risk & limitations
Rho is typically the least impactful Greek for everyday short-term traders, so most retail focus centers on delta, gamma, theta, and vega instead.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.