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Greeks assist trades to estimate their risk when trading options. Understanding the Greeks gives traders an idea of the expected behaviour of an option. For example,

– How will the value of the option change as the stock price changes? (Delta)

– What is the probability of the option expiring in-the-money/out-of-the-money? (Delta)

– What effect will a change in the stock’s volatility have on the option value? (Vega)

– How fast will the option lose value as it approaches expiration? (Theta)