DEFINITION of 'Kappa'
One of the "Greeks," kappa is the ratio of the dollar price change of an option to a 1% change in the expected price volatility (also called implied volatility) of the underlying asset. Kappa tells investors how much an option's price will change for a given change in implied volatility, even if the actual price of the underlying stays the same. Kappa is higher the further away an option's expiration date is and falls as the expiration date approaches. Just as individual options each have a kappa, an options portfolio has a net kappa that is determined by adding up the kappas of each individual position.
BREAKING DOWN 'Kappa'
A positive kappa is associated with a long option and means that the option becomes more valuable as volatility increases, and a negative kappa is associated with a short option and means the option becomes more valuable as volatility decreases. Kappa, also called vega, is one of the most important options Greeks. Other important options Greeks include delta, which measures the impact of a change in the underlying asset's price; gamma, which measures the rate of change of delta; and theta, which measures the impact of a change in time remaining to expiration.

Implied Volatility  IV
The estimated volatility of a security's price. 
Volatility Arbitrage
Trading strategies that attempt to exploit differences between ... 
Vega
The measurement of an option's sensitivity to changes in the ... 
Put On A Call
One of the four types of compound options, this is a "put" option ... 
Call On A Call
A type of compound option in which the investor has the right ... 
Atlantic Spread
An options trading strategy that involves purchasing both an ...

Personal Finance
Kappa Alpha Psi (Fraternity)
Founded in 1911 at Indiana University, Kappa Alpha Psi has crimson and cream colors and about 380 chapters across the U.S. today. 
Options & Futures
Getting To Know The "Greeks"
Understanding price influences on options positions requires learning about delta, theta, vega and gamma. 
Options & Futures
The Forex Greeks And Strategies
We look at the different kinds of Greeks and how they can improve your forex trading. 
Options & Futures
The Anatomy of Options
Find out how you can use the "Greeks" to guide your options trading strategy and help balance your portfolio. 
Options & Futures
Options Greeks: Options and Risk Parameters
by John Summa (Contact Author  Biography)This segment of the options Greeks tutorial will summarize the key Greeks and their roles in the determination of risk and reward in options trading. ... 
Investing Basics
Understanding Vega
In options trading, vega represents the amount option prices are expected to change in response to a change in the underlying assetâ€™s implied volatility. 
Options & Futures
Options Pricing: The Greeks
Many option traders rely on the "Greeks" to evaluate option positions. The Greeks are a collection of statistical values that measure the risk involved in an options contract in relation to certain ... 
Options & Futures
Implied Volatility: Buy Low And Sell High
This value is an essential ingredient in the option pricing recipe. 
Investing Basics
What is Meant by Implied Volatility?
The estimated volatility of a security's price. 
Options & Futures
Options Basics: How To Read An Options Table
Sponsor: At last, an easy way to predict stock trends – get your FREE copy of 5 Chart Patterns You Need to Know. By Jay Kaeppel As more and more traders have learned of the multitude of ...

How does implied volatility impact the pricing of options?
Learn about two specific volatility types associated with options and how implied volatility can impact the pricing of options. Read Answer >> 
Can delta be used to calculate price volatility of an option?
Learn how implied volatility is an output of the BlackScholes option pricing formula, and learn about that option formula's ... Read Answer >> 
How is implied volatility for options impacted by a bearish market?
Learn why implied volatility for option prices increases during bear markets, and learn about the different models for pricing ... Read Answer >> 
What is an option's implied volatility and how is it calculated?
Learn what implied volatility is, how it is calculated using the BlackScholes option pricing model and how to use a simple ... Read Answer >> 
What is the relationship between implied volatility and the volatility skew?
Learn what the relationship is between implied volatility and the volatility skew, and see how implied volatility impacts ... Read Answer >> 
How are call options priced?
Learn how aspects of an underlying security such as stock price and potential for fluctuations in that price, affect the ... Read Answer >>