Options Greeks: Delta, Gamma, Vega, Theta, Rho

Options are one of the most important financial derivatives traded on financial exchanges. Options are probably the best risk management derivatives one can use but they tend to be more complex in nature. Options contracts have a payoff which is not linear and the risk associated with the premium of options contracts comes from multiple factors which is why learning and mastering the importance of options greeks is crucial. Options greeks are nothing but risk indicators which measure and quantify the exposure of options premiums to certain risk factors. In other words, they calculate how much options premiums are going to change based on how much other variables, such as volatility, interest rates, underlying price, are changing. This research was published on the Medium platform a few years ago but it is still valid today. Please click here to read the rest of the research.

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