The Greeks of options trading: Understanding Delta, Gamma, Theta, and Vega
The options trading world is multi-faceted and complex, with incredible opportunities for savvy investors. The so-called “Greeks”, Delta, Gamma, Theta, and Vega, play a central role within this intricate landscape. These terms are not just mere concepts but specific measures that guide options traders in managing risk and making more informed decisions. Delta, for example, represents an option’s price sensitivity to changes in the underlying asset’s value. Gamma consistently measures the rate Delta changes in response to price movements. Theta, however, captures the impact of time decay on an option’s…
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