Ultima

DEFINITION of 'Ultima'

The rate at which the vomma of an option will react to volatility in the underlying market. It is the third order derivative of the option value with respect to volatility, or the derivative of vomma with respect to the derivative of volatility.
Ultima is part of the group of measures known as the "Greeks" (other measures include delta, gamma and vega) which are used in options pricing.

BREAKING DOWN 'Ultima'

Ultima is useful to investors who are making options trades and take the vomma and vega into consideration, especially when implementing exotic options which may change format over the period of maturity. This metric is one of the inputs utilized in the Black-Scholes model.




RELATED TERMS
  1. Vomma

    The rate at which the vega of an option will react to volatility ...
  2. Color

    The rate at which the gamma of an option or warrant will change ...
  3. Vega

    The measurement of an option's sensitivity to changes in the ...
  4. Speed

    The rate at which the gamma of an option or warrant will change ...
  5. Underlying Option Security

    An underlying option security is the financial instrument on ...
  6. Gamma

    The rate of change for delta with respect to the underlying asset's ...
Related Articles
  1. 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. ...
  2. 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 ...
  3. Options & Futures

    The Forex Greeks And Strategies

    We look at the different kinds of Greeks and how they can improve your forex trading.
  4. Options & Futures

    Getting To Know The "Greeks"

    Understanding price influences on options positions requires learning about delta, theta, vega and gamma.
  5. 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 asset’s implied volatility.
  6. 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.
  7. Term

    Measuring Options With the Greeks

    Delta, gamma, theta and vega are “the Greeks,” and they provide a way to measure the sensitivity of an option’s price.
  8. Investing Basics

    Explaining Gamma

    Gamma is a measurement of how fast the delta of an option’s price changes after a 1-point movement in the underlying security.
  9. Options & Futures

    Option Volatility: Strategies and Volatility

    By John Summa, CTA, PhD, Founder of OptionsNerd.comWhen an option position is established, either net buying or selling, the volatility dimension often gets overlooked by inexperienced traders, ...
  10. 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 ...
RELATED FAQS
  1. What does negative vega mean for credit spreads?

    Learn about the option Greek vega, credit spreads and how vega affects the values of option credit spreads when volatility ... Read Answer >>
  2. 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 >>
  3. Is there a better metric for hedging options than delta?

    Learn about delta and gamma hedging options, why gamma is a better metric to use to hedge and how gamma can be used with ... Read Answer >>
  4. Can delta be used to calculate price volatility of an option?

    Learn how implied volatility is an output of the Black-Scholes option pricing formula, and learn about that option formula's ... Read Answer >>
  5. What does it mean to be long or short a derivative?

    Find out more about derivative securities and what it indicates when traders or investors establish a long or short position ... Read Answer >>
  6. What is the difference between derivatives and options?

    Learn how options are one type of derivative and how equity options derive their value from a stock, and understand other ... Read Answer >>
Hot Definitions
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  3. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center