Greater Fool glossary / Options & Derivatives

options Greeks

A set of mathematical measures that describe how an option's price changes based on different factors. Each Greek measures sensitivity to a different variable, like the underlying stock price, time passing, or price volatility.

In practice

Before buying a call option on a stock, you might check the Greeks to understand how much the option price will change if the stock moves up $1 (delta), if one day passes (theta), or if volatility increases (vega).

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