Basics Of Options
As we have learned earlier, Option premiums change with changes in the factors that determine option pricing, i.e., factors such as strike price, volatility, term to maturity, etc. The sensitivity of option premium to each of these factors is known as 'Option Greeks.'
For a successful options trade in the market there are several forces which need to work in the option trader’s favour. These forces are together called ‘The Option Greeks’. These forces influence an option contract in real time, affecting the premium to either increase or decrease. These forces not only influence the premiums directly but also influence each other.
The five Option Greeks are:
We will discuss all of the above in our subsequent units.