The Bull

Monday 22

April, 2019 6:21 PM



DICTIONARY : A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Greeks

What does it mean?

Delta, Gamma, Vega, and Theta.

The factors that influence the price of an option are referred to as the "Greeks". These are a set of risk measures that indicate how exposed an option is to time-value decay, implied volatility and changes in the underlying price of the asset.

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TheBull says...

Greeks assist trades to estimate their risk when trading options. Understanding the Greeks gives traders an idea of the expected behaviour of an option. For example,

- How will the value of the option change as the stock price changes? (Delta)

- What is the probability of the option expiring in-the-money/out-of-the-money? (Delta)

- What effect will a change in the stock's volatility have on the option value? (Vega)

- How fast will the option lose value as it approaches expiration? (Theta)

   

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