Options Analyst Andy Crowder makes trading options simple. He picks one tool and uses it for its specifically intended purpose. Follow along with Andy to learn how to effectively trade options!
The Greeks – delta, gamma, theta, and vega – are measurements of options prices with respect to movement in the underlying, time until expiration, and volatility.
Options can be traded not only for profits attributable to movements in the underlying, but changes in other factors such as the amount of time left in the life of the optrions, and movements in supply and demand. Having a thorough understanding of how options can change in value from changes in these inputs allows the trader to make profitable trades and also may provide insights for nonprofitable trades.
The first Greek that I want to discuss is the delta of options, arguably the most important of them all.