Option Greeks
If you're the pilot of an aircraft, the Greeks are your instrument panel. If you don't manage your instrument panel properly, well...you get the picture. Understanding the Greeks are absolutely critical to every Option position. We break this course into easy to understand chapters for all the four Greeks - Delta, the king of all Greeks. Gamma - the silent operator. Theta - every Option seller's dream. And Vega - Watch out for this one.. Most beginners to Options tend to ignore the Greeks. Master the Greeks and you'll shave off months of learning curve. Not to mention, you can then fly your aircraft on "auto-pilot" (with help from the Greeks).
What you will master
- The four Greeks that govern all movements in Option prices
- How each Greek individually impacts option prices
- Why Delta is the king of all Greeks
- What do we mean by directional risk
- How does each Greek affect a buyer and a seller of Options
- Why the Greeks are critical to understand your Option position
- How the Greeks impact choice of “moneyness” and expiry series
WATCH
Greeks are critical to analyze but what about Black Scholes formula for volatility. I belive the formula does not compute volatility
Yes the formula does not account for “changes” in volatility. But platforms today take care of that shortcoming.
I generally don’t give importance to gamma on credit spreads. Is this a mistake ?
Gus, Gamma becomes very important when you’re close to expiry. Gamma will move Delta the maximum also for ATM options. Otherwise for longer term Options, you don’t have to worry too much about Gamma, unless you have a negative Gamma position (credit spreads etc). Negative gamma positions generally will tend to “snowball” as the position gets worse
Is this course require prerequisits – i know options basics but i want to learn about greeks more
Kayaro, If you’re clear on the Basics, then you can take this course