Rho Examples
Rho has different practical meaning depending on option type, expiration, and whether the position is long or short.
Long call
A long call often has positive rho. If interest rates rise, the theoretical value of the call may increase, all else equal.
Example: A call with rho of 0.08 may gain roughly $0.08 per share if rates rise by 1 percentage point.
Long put
A long put often has negative rho. If interest rates rise, the theoretical value of the put may decline, all else equal.
Short call
A short call position is exposed opposite the long call. A rate increase that helps the long call may hurt the short call seller.
Short put
A short put position is exposed opposite the long put. A rate increase that hurts the long put may help the short put seller, before considering other risks.
LEAPS
Longer-dated options may show more meaningful rho because interest-rate assumptions have more time to affect theoretical value.
Low-rate sensitivity cases
Short-dated options may have small rho exposure compared with delta, gamma, theta, or vega. Rho can still be worth checking when rate moves are large.