Options Bootcamp 8: It’s All Greek to Me

Options Bootcamp 8: It's All Greek to Me

Basic Training: Time to revisit the Greeks:

  • Delta - The chief Greek
  • Gamma - The rate of change of Delta, as the underlying stock changes, but sometimes overwhelming to beginners.
  • Theta - Time decay. The rate of change of an option given a change in the time to expiration.
  • Vega - The king of the Greeks. The rate of change of an option price, as a result of change in implied volatility.

What is the difference between a retail and professional options trader?

Mail Call: Reaching out for a bootcamp lifeline.

  • Tweet from Tex05: Mark, why do you always say that retail options traders trade Delta and professionals trade Vega?
  • Email question from Evan - Atlanta, GA: Can you guys explain the importance of dividends to an options trader? That seems particularly important given the recent snafu over SPY dividends. Why are dividends important to options traders and how should it affect my options trading?
  • Facebook question from Mike Debrasse: I'm hearing a lot about this being a "low volatility environment." Apparently, that makes it difficult for options traders. Why is that? Why does options volume drop so dramatically when volatility goes down? Should I wait to trade options before volatility/vega goes up? Thanks for your help.

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