Vega
| ||
The sensitivity of an option price to volatility. Typically, options increase in value during periods of high volatility. Vega is the measurement of the sensitivity of the options price or premium to change in volatility in the underlying. If volatility increases, the options value will increase; if volatility decreases, then the value of the option will decrease. |
||
Additional Comments:
Vega tends to be strongest in the at-the-money options rather than in-the-money or out-of-the-money options.
|
Related Terms: | ||
Volatility The magnitude of price (or yield) changes over a predefined period of time. The amount by ... Volatility Stops Monitoring implied volatility is critical in long neutral delta trading. Check the current volatility of the ... Back Spread A back spread is essentially an inverted ratio spread.When constructing a back spread, you are selling ... |
« View the Stock Market Dictionary »
Latest Financial Advice
- Impact of News on Trader’s Psychology and Market Trends
- Overconfidence Bias in Stock Trading: A Critical Analysis
- Mastering Mindfulness Practices for Traders
- Impact of Market Volatility on Individual Psychology
- Leveraging Intuition in Stock Trading: A New Approach
- Mastering Mental Strategies for Effective Swing Trading
- Harnessing Behavioral Finance to Anticipate Market Trends
Free Investment Advice
Get free stock market tips and investing advice by subscribing to our newsletter: |
* Your information will not be shared or sold. |
Recommended Reading
Categories
- Trading Basics
- Investing 101
- Investing Essentials
- Understanding the Risks
- Beginning to Trade
- Trading Strategies
- Trading Psychology
- Retirement Investing
- Personal Finance
- Advanced Trading
- Penny Stocks
- FOREX Trading
- Commodity Futures
- Stock Tips
- Going Public
- Real Estate
- Research Tools
- Stock Spam
- Reviews
- Stock Market Dictionary