Account Info
Log Out
No matches yet
Operations too frequent. Please try again later.
Please check network settings and try again Refresh Refresh
History record delete
    Quotes All >
      News All >
        Log in to access Online Inquiry

        Meet the Options Greeks

        Views 23212022.12.21

        Meet the Greeks - Vega

        Options Greek Vega measures an option's sensitivity to implied volatility.

        Volatility gauges stability. To be more specific, if an option's price changes dramatically, it is considered highly volatile; conversely, if the price does not move much, the option is of low volatility.

        Implied volatility measures how much the stock is expected to move in a given timeframe based on an option's current price.

        Vega = Option's Price Change / Volatility Change

        For example, suppose there is a $7.5 call option with a Vega of 0.12. Its implied volatility is at 20%.

        If its implied volatility goes up from 20% to 21.5%, its volatility increases by 1.5.

        According to the formula, the option's price change is 1.5X0.12=0.18. The option's price is expected to rise to $7.68.

        On the contrary, if the implied volatility decreases from 20% to 18%, volatility is expected to drop by 2.

        The option's price change is 2X0.12=0.24 and the option's price will drop to $7.26.

        In conclusion, the closer the option's price to the strike, the higher Vega's value. But the value decreases as the expiration nears.

        Trade like a pro with moomoo

        Start your professional trading today

        Terms and conditions apply right-arrow

        Opening new options positions close to or on their expiration date comes with substantial risk of losses for reasons that include potential volatility of the underlying security and limited time to expiration. Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request.

        This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose of the above content.

        Moomoo is a financial information and trading app offered by Moomoo Technologies Inc.

        In the U.S., investment products and services available through the moomoo app are offered by Moomoo Financial Inc., a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and a member of Financial Industry Regulatory Authority (FINRA)/Securities Investor Protection Corporation (SIPC).

        In Singapore, investment products and services available through the moomoo app are offered through Moomoo Financial Singapore Pte. Ltd. regulated by the Monetary Authority of Singapore (MAS). Moomoo Financial Singapore Pte. Ltd. is a Capital Markets Services Licence (License No. CMS101000) holder with the Exempt Financial Adviser Status. This advertisement has not been reviewed by the Monetary Authority of Singapore.

        In Australia, financial products and services available through the moomoo app are provided by Futu Securities (Australia) Ltd, an Australian Financial Services Licensee (AFSL No. 224663) regulated by the Australian Securities and Investment Commission (ASIC). Please read and understand our Financial Services Guide, Terms and Conditions, Privacy Policy and other disclosure documents which are available on our websites and Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd. and Futu Securities (Australia) Ltd are affiliated companies.