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root strategies

Components of a Summary Table

Summarizing strategies for quick reference
Delta can estimate for us:
The probability of expiring ITM
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The share equivalency of our position
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Directional bias
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All of the above
Correct! Delta is essential for understanding and managing risk
Positive theta means:
The position does not expire
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The position needs more time to become profitable
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The position profits off of the passage of time
Correct! Positive theta can be a huge advantage for making money. It allows us to profit off of the natural time decay of option prices.
The position benefits from an increase in implied volatility
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You have a negative vega position and IV is expanding. What does that mean for your position?
Your P/L is benefitting from IV expansion
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Your P/L is being hindered by IV expansion
Correct! Negative vega means your position needs IV to contract. Expansion is disadvantageous to your P/L and could cost you some money.
Your P/L is unaffected by IV expansion
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Your deltas are decreasing from IV expansion
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Your position is making money but your rate of profit seems to be slowing down. What is a possible explanation for his?
Your position has negative gamma
Correct! Negative gamma means your P/L will slow down as the position profits and speed up as the position loses.
Your position has static delta
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Your position is too far ITM
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You put on a bad position
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What does a reversible theta mean?
The option's expiration dates can be extended
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Theta move opposite of delta
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Negative theta profits off of the passage of time
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Theta can fluctuate between positive and negative
Correct! Some types of strategies have reversible greeks, meaning they can fluctuate between positive and negative under the right circumstances – usually due to moneyness

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root strategies
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