Options trading offers investors a way to manage risk and leverage holdings, but it comes with complexities. Understanding Option Greeks—Delta, Theta, Vega, and Gamma—is essential for navigating this market effectively.
- Option Greeks (Delta, Theta, Vega, Gamma) quantify how market changes affect an option's price and risk.
- The Option Premium consists of intrinsic value (current profitability) and time value (potential future profitability).
- Understanding Greeks enables traders to refine strategies, hedge risks, and adjust positions dynamically.
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