Stocks/Options Terminology

Question 1

Delta

Answer 1

Is a ratio also known as hedge ratio that compares the change in the price of the underlying asset with the change in the price of a derivative or option?

One of four measures option traders uses for analyzing risk. The other three are gamma, theta, and vega.

For options traders delta indicates how many options contracts are needed to hedge a long or short position in the underlying asset.

Question 2

Theta

Answer 2

measures the impact of a change in the time remaining

Question 3

Vega

Answer 3

Measures the impact of a change in volatility

Question 4

Gamma

Answer 4

Measures the rate of change of delta