OPT_BS_GAMMA

OPT_BS_GAMMA gamma of a European option

Synopsis

OPT_BS_GAMMA(spot,strike,time,rate,volatility,cost_of_carry)

Arguments

spot: spot price

strike: strike price

time: time to maturity in years

rate: risk-free interest rate to the exercise date in percent

volatility: annualized volatility of the asset in percent for the period through to the exercise date

cost_of_carry: net cost of holding the underlying asset (for common stocks, the risk free rate less the dividend yield), defaults to 0

Description

OPT_BS_GAMMA uses the Black-Scholes model to calculate the 'gamma' of a European option struck at strike on an asset with spot price spot. The gamma of an option is the second derivative of its price with respect to the price of the underlying asset.

Note

Gamma is expressed as the rate of change of delta per unit change in spot. Gamma is the same for calls and puts.