DEFINITION of 'Vega Neutral'
A method of managing risk in options trading by establishing a hedge against the implied volatility of the underlying asset. A vega neutral option position will be not be sensitive to volatility fluctuations. These strategies are used to hedge against the risks of price sensitivity, secondorder time price sensitivity and time sensitivity, respectively.
INVESTOPEDIA EXPLAINS 'Vega Neutral'
A vega neutral portfolio is still subject to risk. For example, in a portfolio of options maturing at different times, changes in volatility over time can dramatically affect total returns, making the portfolio sensitive to time vega. Furthermore, if the assumptions used to establish a position turn out to be incorrect, a position that is intended to be neutral can actually be risky. Vega is one of the "options Greeks" along with delta, gamma, rho and theta. These are used to measure different types of risk in options portfolios. Other options riskmanagement positions include delta neutral, gamma neutral and theta neutral.

Maturity
The period of time for which a financial instrument remains outstanding. ... 
Gamma
The rate of change for delta with respect to the underlying asset's ... 
Hedge
Making an investment to reduce the risk of adverse price movements ... 
Gamma Neutral
A method of managing risk in options trading by establishing ... 
Vega
The measurement of an option's sensitivity to changes in the ... 
Greeks
Dimensions of risk involved in taking a position in an option ...

Options & Futures
An Introduction To GammaDelta Neutral Option Spreads
Find the middle ground between conservative and highrisk option strategies. 
Options & Futures
Getting To Know The "Greeks"
Understanding price influences on options positions requires learning about delta, theta, vega and gamma. 
Options & Futures
Options Trading Strategies: Understanding Position Delta
Learn more about the position delta hedge ratio and how it can tell you the number of contracts needed to hedge a position in the underlying asset. 
Options & Futures
Using "The Greeks" To Understand Options
These riskexposure measurements help traders detect how sensitive a specific trade is to price, volatility and time decay. 
Options & Futures
5 Secrets You Didn't Know About Roth IRAs
Between its generous tax benefits at retirement and no required minimum distributions, a Roth IRA is well worth considering if you're eligible to have one. 
Forex Strategies
The 10 Riskiest Investments
Investors seeking high returns must also be prepared for high risk. Here are ten of the riskiest investments available. 
Options & Futures
Trade Covered Calls On High Dividend Paying Stocks
We explain the risks, rewards, timing, and profit and loss considerations for covered calls with dividend stocks. 
Options & Futures
Was Buffet Right about Derivatives as WMDs?
Why Warren Buffet described derivatives as weapons of mass destruction, and when can they be helpful or harmful? 
Options & Futures
Examples Of ExchangeTraded Derivatives
We look at some of the most common exchangetraded derivatives. 
Options & Futures
Advantages Of Trading Futures Over Stocks
We look at the top eight advantages of trading futures over stocks.