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.
BREAKING DOWN '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.

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 ... 
Theta
A measure of the rate of decline in the value of an option due ... 
Speed
The rate at which the gamma of an option or warrant will change ... 
Price Sensitivity
The degree to which the price of a product affects consumers ...

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Measuring Options With the Greeks
Delta, gamma, theta and vega are âthe Greeks,â and they provide a way to measure the sensitivity of an optionâs price. 
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Using "The Greeks" To Understand Options
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The Forex Greeks And Strategies
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Getting To Know The "Greeks"
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Understanding Vega
In options trading, vega represents the amount option prices are expected to change in response to a change in the underlying assetâs implied volatility. 
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Capturing Profits With PositionDelta Neutral Trading
This trading strategy will show you how to gain from a decline in implied volatility on any movement of the underlying. 
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An Introduction To GammaDelta Neutral Option Spreads
Find the middle ground between conservative and highrisk option strategies. 
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The Anatomy of Options
Find out how you can use the "Greeks" to guide your options trading strategy and help balance your portfolio. 
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The Ins And Outs Of Selling Options
Selling options can seem intimidating but with these tips, you can enter the market with confidence. 
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Implied Volatility: Buy Low And Sell High
This value is an essential ingredient in the option pricing recipe.

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