Market greeks known as option greeks are group of indicators used to measure the sensitivity of option process with respect to change in price of underlying asset, passage of time or changes in volatility.
Here is the list of few useful greeks followed by their respective explanation:
Delta - The delta measures the rate of change of price of option with respect of relative change in the value of underlying asset. The delta will have value from 1 and -1.Delta is in between 1 and 0 for calls, or -1 and 0 for put. For example if delta for ITC call is 0.25 , often referred as 25%.This means for every 1 Rs increase in ITC , the call option would appreciate 0.25 in value. Many traders use delta to measure the risk of the option expiring in the money.
Vega - This greek measures the sensitivity of option to volatility in the underlying asset. The option value will gain or lose as volatility rises or falls by 1%.
Theta - This greek measures the sensitivity of option value to passage of time. For example if ITC call option has theta of 0.04 , a trader might operate under the assumption that the value of option would lose approximately 4% per day if all other parameters remained unchanged.
The greeks are only snapshot of present environment and can't predict the future.
Here is the list of few useful greeks followed by their respective explanation:
Delta - The delta measures the rate of change of price of option with respect of relative change in the value of underlying asset. The delta will have value from 1 and -1.Delta is in between 1 and 0 for calls, or -1 and 0 for put. For example if delta for ITC call is 0.25 , often referred as 25%.This means for every 1 Rs increase in ITC , the call option would appreciate 0.25 in value. Many traders use delta to measure the risk of the option expiring in the money.
Vega - This greek measures the sensitivity of option to volatility in the underlying asset. The option value will gain or lose as volatility rises or falls by 1%.
Theta - This greek measures the sensitivity of option value to passage of time. For example if ITC call option has theta of 0.04 , a trader might operate under the assumption that the value of option would lose approximately 4% per day if all other parameters remained unchanged.
The greeks are only snapshot of present environment and can't predict the future.
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