Greeks help traders understand and manage risks associated with options. Greeks measure the sensitivity of an option's price to various factors, such as underlying asset price, time to expiration, and volatility.
Click '>Play' above to find out more about 'The Greeks' - a.k.a. option sensitivities.
Delta measures the change of an option's price relative to a change in the underlying, helping traders understand how much an option's price will move if the underlying moves.
Theta measures the rate of change of an option's price relative to time to expiry. Important in understanding how much the option's price decreases as expiration approaches.
Vega measures the change of an option's price relative to changes in volatility.
Lastly, Gamma measures sensitivity to delta. It helps traders understand how their risk profile will change as the option nears expiration.
Greeks are used by traders to better understand and manage the risk associated with options. Using greeks, traders are able to make informed decisions in options trades, and how to manage risk.
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This is not investment advice. Lucidate is not an investment advisor. Options prices can rise and fall. Always consult with a regulated financial adviser before making investment decisions