DEFINITION of 'Greeks'
Dimensions of risk involved in taking a position in an option (or other derivative). Each risk variable is a result of an imperfect assumption or relationship of the option with another underlying variable. Various sophisticated hedging strategies are used to neutralize or decrease the effects of each variable of risk.
INVESTOPEDIA EXPLAINS 'Greeks'
Neutralizing the effect of each variable requires substantial buying and selling and, as a result of such high transactions costs, many traders only make periodic attempts to rebalance their options portfolios.
With the exception of vega (which is not a Greek letter), each measure of risk is represented by a different letter of the Greek alphabet:
Δ(Delta) represents the rate of change between the option's price and the underlying asset's price  in other words, price sensitivity.
Θ(Theta) represents the rate of change between an option portfolio and time, or time sensitivity.
Γ(Gamma) represents the rate of change between an option portfolio's delta and the underlying asset's price  in other words, secondorder time price sensitivity.
ϒ(Vega) represents the rate of change between an option portfolio's value and the underlying asset's volatility  in other words, sensitivity to volatility.
ρ (Rho) represents the rate of change between an option portfolio's value and the interest rate, or sensitivity to the interest rate.

Zomma
An options greek used to measure the change in gamma in relation ... 
Ultima
The rate at which the vomma of an option will react to volatility ... 
Lambda
The ratio of the percentage change in an option contract's price ... 
Delta
The ratio comparing the change in the price of the underlying ... 
Theta
A measure of the rate of decline in the value of an option due ... 
Vega
The measurement of an option's sensitivity to changes in the ...

What options strategies are best suited for investing in the aerospace sector?
The best options strategies for investing in the aerospace sector exploit the sector's volatility and propensity for big ... Read Full Answer >> 
What options strategies are best suited for investing in the Internet sector?
The long straddle and long strangle options strategies enable investors to capitalize on the Internet sector's volatility. ... Read Full Answer >> 
How many attempts at the Series 7 exam are permitted?
The National Association of Securities Dealers (NASD) has not placed any limits on the number of times you can attempt to ... Read Full Answer >> 
Where can I buy covered call ETFs (exchangetraded funds)?
Covered calls can be traded through any major retail broker. Investors need to have their brokerage accounts approved for ... Read Full Answer >> 
How do I set a strike price in a put?
The strike price of a put option is the price at which the option can be exercised. A put option gives the buyer, or holder, ... Read Full Answer >> 
How can I profit from a decline in the drugs sector?
Profit from a decline in the drugs sector by short selling or by purchasing futures contracts or put options. Investors use ... Read Full Answer >>

Options & Futures
Getting To Know The "Greeks"
Understanding price influences on options positions requires learning about delta, theta, vega and gamma. 
Options & Futures
Options Basics Tutorial
Discover the world of options, from primary concepts to how options work and why you might use them. 
Options & Futures
Trading The QQQQ With InTheMoney Put Spreads
Even beginners may use this strategy to trade a bullish outlook. 
Options & Futures
Option Spread Strategies
Learn why option spreads offer trading opportunities with limited risk and greater versatility. 
Fundamental Analysis
Explaining the Geometric Mean
The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio. 
Options & Futures
Why Is Best Buy Stock So Volatile?
We look at why BBY has been so volatile in the past and whether this trend is likely to continue or abate in the future. 
Investing Basics
What is a Stock Option?
An employee stock option is a right given to an employee to buy a certain number of company stock shares at a certain time and price in the future. 
Options & Futures
Circumvent Limitations of BlackScholes Model
Mathematical or quantitative modelbased trading continues to gain momentum, despite major failures like the financial crisis of 200809, which was attributed to the flawed use of trading models. ... 
Retirement
Don't Make These Top 10 Mistakes On Your Roth IRA
Don't lose out on the benefits of a Roth by contributing too much, breaking rollover rules or making other avoidable errors. 
Trading Strategies
A Guide Of Option Trading Strategies For Beginners
Options offer alternative strategies for investors to profit from trading underlying securities, provided the beginner understands the pros and cons.