Divergence Secrets

Option Greeks: Measuring Sensitivity

The Option Greeks are metrics that measure how different factors affect an option’s price. The key Greeks include:

Delta: Change in option price relative to the underlying asset’s price.

Theta: Time decay effect.

Vega: Sensitivity to volatility changes.

Gamma: Rate of change of Delta.

Rho: Sensitivity to interest rates.
These Greeks help traders understand risk exposure and manage positions scientifically. For example, a trader might use Theta to manage time decay in short-term options or Vega to hedge against volatility spikes. Mastery of Greeks is crucial for professional option traders who aim for consistency and precision.