Premiums and Greeks (lite)

Premium parts and two vocab words: delta and theta — no formula worship. Education only — not a recommendation to buy, sell, or hold anything.

What’s in a premium

• Intrinsic — value if exercised now (roughly).
• Time / extrinsic — the “maybe” value that can decay.

Delta (vocab)

Delta roughly describes how much an option’s price tends to move when the underlying moves $1 (model-dependent). Calls usually have positive delta; puts negative. Treat it as a sensitivity label, not a crystal ball.

Theta (vocab)

Theta points at time decay — all else equal, extrinsic value tends to erode as expiration nears. Long options can feel this as a headwind.

Lite boundary

Greeks are model outputs. Markets gap; assumptions break. Vocabulary first; cockiness never.

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