Rho, and why you can mostly ignore it
Rho is the change in an option price for a one percentage point move in the risk-free rate. On the UBER $72.50 call, 42 days out, it is $2.43 per contract. A one dollar move in the stock is worth $36 on the same contract, which is why rho is the Greek nobody quotes.
Most Greek explainers cover rho out of completeness and then say it does not matter. That is nearly right, and the exceptions are worth the two minutes.
The number, in context
Short the October 17 $72.50 call on UBER, 42 days out, at a risk-free rate of 4.2 percent.
- Rho: $2.43 per contract per percentage point.
- A one dollar move in the stock: $36.
- One day of decay: $3.45.
- A one point move in implied volatility: $8.41.
A full percentage point on the risk-free rate is a year of Fed policy, and it is worth less than a single day of theta. Meanwhile the stock moves a dollar most days. That is the case for ignoring rho, and it is a strong one.
Why rates affect an option at all
Buying a call instead of the stock leaves you holding cash you did not spend, and that cash earns interest. The higher the rate, the more that deferral is worth, so calls get more expensive as rates rise.
Puts run the other way. Owning a put means you will receive the strike later rather than sooner, and a higher rate discounts that future payment harder, so puts get cheaper as rates rise. Call rho is positive, put rho is negative.
You can see it directly in put-call parity, where the strike is discounted at the risk-free rate. That relationship is where rho actually comes from, rather than from anything in the option's behaviour.
When it stops being negligible
Rho scales with time, harder than the other Greeks do.
| Days to expiry | Rho | Option price | 1 point of rate, as a share of premium |
|---|---|---|---|
| 42 | $3.89 | $312 | 1.2% |
| 365 | $32.04 | $1,000 | 3.2% |
| 730 | $60.85 | $1,470 | 4.1% |
The first case where it matters: LEAPS. A two-year contract carries fifteen times the rate sensitivity of a monthly. If you run a long-dated call as a stock substitute, you own a rate position whether you meant to or not, and a Fed cycle is a real component of the outcome.
The second case: deep in-the-money options. A call with a delta near 1.00 is a leveraged stock position, and the financing embedded in it is exactly what rho measures. The deeper in the money, the more it behaves like borrowing to buy shares.
The place it quietly matters most
Not the option. The cash behind it.
A cash-secured put on a $25 strike ties up $2,500 for the whole trade. At 4.2 percent that cash earns about $12 a month sitting in a money market fund. Whether your broker actually pays you that on secured cash is a question worth asking, because it is a meaningful share of a small premium and it is not in any Greek.
Rates also set the bar you are measuring against. A 5 percent annualized premium is a good trade when cash pays 0.5 percent and a bad one when cash pays 4.2 percent, for identical risk. That comparison has moved more than most people's strategy has.
The honest summary
For 30 to 45 day equity options, rho is a rounding error and you can stop thinking about it. Keep it in mind for LEAPS, for deep in-the-money positions, and for the opportunity cost of the cash your strategy immobilizes, which is the version of interest rate risk that actually shows up in a premium seller's returns.
OptionsKing scores every candidate strike on a deterministic 0 to 100 scale, blends that score with the return on the capital the trade ties up, and shows you the highest-ranked handful. There is no minimum score. How it works covers what the ranking does and does not tell you.
Questions people actually ask
What is rho in options?
The change in an option price for a one percentage point move in the risk-free interest rate. On a 42-day UBER call it was $2.43 per contract, against $36 for a one dollar move in the stock.
Why is rho positive for calls and negative for puts?
Because a call defers the purchase, so the cash you did not spend earns interest and the call is worth more as rates rise. A put defers a receipt, and a higher rate discounts that future payment harder, so the put is worth less.
When does rho actually matter?
On long-dated contracts and deep in-the-money ones. A 730-day at-the-money call carried $60.85 of rho against $3.89 for a 42-day one, so LEAPS used as stock substitutes carry a genuine interest rate position.
Do interest rates affect a cash-secured put strategy?
More through the cash than the option. A $2,500 secured position earns roughly $12 a month at 4.2 percent, and the prevailing rate also sets the return your premium has to beat before the risk is worth taking.
Sources
Rules and thresholds above were checked against these documents on August 4, 2026. Exchange and broker rules change. Confirm anything you are about to act on with your own broker.
Keep reading
Do the math on your own trade
Every price in this article is an illustrative worked example, not a quote. Read The Greeks for the rest of the series, and the disclaimer before you act on any of it. Selling options carries real risk of loss, and the loss can be far larger than the premium you collected.