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The option Greeks are used by options traders to measure an option's expected price changes relative to small changes in the stock price and implied volatility, and the passage of time.

In this video, we'll explain the four primary option Greeks and use many examples to illustrate what each Greek represents.

The four primary option Greeks are Delta, Gamma, Theta and Vega.

Delta is an option's expected price change with a $1 change in the stock price.

Gamma is an option delta's expected change with a $1 change in the stock price.

Theta is how much an option's extrinsic value is expected to decrease by with the passing of one day.

Vega is how much an option's price is expected to change with a 1% change in implied volatility.

Together, the option Greeks can be used to assess the various risk exposures an option position has, or estimate how a trade might perform if certain variables change. tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with Project Finance(Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade and/or any of its affiliated companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. tastytrade does not warrant the accuracy or content of the products or services offered by Marketing Agent or this website. Marketing Agent is independent and is not an affiliate of tastytrade.