Why Is the Interest Rate Effect (Rho) Negligible for Short-Dated Options?

The interest rate effect (Rho) is negligible for short-dated options because the time to expiration is very short. The Black-Scholes model discounts the strike price back to the present value using the risk-free rate and time.

With a short time to expiration, the effect of discounting is minimal, meaning even a large change in interest rates has a very small impact on the option's premium.