Learn Option Basics Part 9

Greeks in Action
Rating: 0.0 out of 5 (0 ratings)
334 students
English [Auto]

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


  • Requirement - Option Basics Part 8


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.


  • 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


Online financial market training
Trade2 Financial education
  • 4.4 Instructor Rating
  • 65 Reviews
  • 2,230 Students
  • 21 Courses

Financial education includes trading in commodities, index products, options, algorithmic trading, forex, futures, bonds.

Learn to trade from the world's leading traders.

The IL Center for Financial Education invites you to learn how to trade in the professional trading strategies of institutional entities, including hedging and risk management for an investment portfolio and developing an automated trading algorithm.