Rho
The change in an option's price for a one-percentage-point change in the risk-free interest rate.
Formula
Rho = Change in Option Price / Change in Risk-Free Rate (per 1 percentage point)
Unit
₹
In depth
Rho is the least significant Greek for short-dated options, because interest rates move slowly and the effect over a few weeks is negligible next to delta, gamma, theta and vega. It matters for long-dated contracts, where the present value of the strike is materially affected by the discount rate. Calls have positive rho and puts negative, because a higher rate reduces the present value of the strike that a call holder will pay and a put holder will receive. For weekly index options in India it can be ignored entirely without material error.
Worked example
A 30-day option with rho of 2 changes by 2 points if rates move a full percentage point — 2 x 75 = ₹150 on a lot. Theta at -8 a day removes four times that amount in a single session.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Rho” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.