Options Greeks
A set of calculated measures (Delta, Gamma, Theta, Vega) describing how an option's price is expected to change relative to different market factors.
The options Greeks are a set of calculated measures describing how an option's price is expected to change relative to different underlying market factors: Delta measures sensitivity to the underlying asset's price, Gamma measures how Delta itself changes, Theta measures sensitivity to time passing (time decay), and Vega measures sensitivity to implied volatility.
Together, the Greeks let an options trader or market maker understand and manage a position's specific risk exposures individually, rather than treating an option's price as a single, undifferentiated number that just moves unpredictably.
Examples
- An option's Theta specifically measures how much value it's expected to lose purely from the passage of time, holding everything else constant.
- A market maker uses the Greeks to understand and manage an options position's distinct risk exposures individually, rather than as one undifferentiated price.