Instructors: Trade2 Financial education
8 sections * 27 lectures * 1h 28m total length
Video: MP4 1280×720 44 KHz | English + Sub
Updated 11/2021 | Size: 960 MB
Greeks in Action
What you’ll learn
Learn about greeks in action and impact on options trading
Introduction greeks in action
Live project end software testing training included.
Greeks in real-time
Requirements
Requirement – Option Basics Part 8
Description
An option’s price can be influenced by a number of factors that can either help or hurt traders depending on the type of positions they have taken. Successful traders understand the factors that influence options pricing, which include the so-called "Greeks"-a set of risk measures so named after the Greek letters that denote them, which indicate how sensitive an option is to time-value decay, changes in implied volatility, and movements in the price of its underlying security.
These four primary Greek risk measures are known as an option’s theta, vega, delta, and gamma. Below, we examine each in greater detail.
KEY TAKEAWAYS
An option’s "Greeks" describes its various risk parameters.
For instance, Delta is a measure of the change in an option’s price or premium resulting from a change in the underlying asset, while theta measures its price decay as time passes.
Gamma measures delta’s rate of change over time, as well as the rate of change in the underlying asset. Gamma helps forecast price moves in the underlying asset.
Vega measures the risk of changes in implied volatility or the forward-looking expected volatility of the underlying asset price.
Options can be exercised, meaning they can be converted to shares of the underlying asset at a specified price called the strike price. Every option has an end date called an expiration date, and a cost or value associated with it called the premium. The premium or price of an option is usually based on an option pricing model, like Black-Scholes, which leads to fluctuations in price. Greeks are usually viewed in conjunction with an option price model to help understand and gauge associated risks.
Who this course is for
Option Trader
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