Option Greeks

In options trading, you may notice the use of certain greek alphabets when describing risks associated with various positions. They are known as "the greeks" and here, in this article, we shall discuss the four most commonly used ones. They are delta, gamma, theta and vega.

  1. Delta - Measures the exposure of option price to movement of underlying stock price
  2. Gamma - Measures the exposure of the option delta to the movement of the underlying stock price
  3. Theta - Measures the exposure of the option price to the passage of time
  4. Vega - Measures the exposure of the option price to changes in volatility of the underlying
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