What is 'Vega'
Vega is the measurement of an option's sensitivity to changes in the volatility of the underlying asset. Vega represents the amount that an option contract's price changes in reaction to a 1% change in the volatility of the underlying asset. Volatility measures the amount and speed at which price moves up and down, and is often based on changes in recent, historical prices in a trading instrument. Vega changes when there are large price movements (increased volatility) in the underlying asset, and falls as the option approaches expiration. Vega is one of a group of Greeks used in options analysis, and is the only one not represented by a Greek letter.
BREAKING DOWN 'Vega'
One of the primary analysis techniques utilized in options trading is the Greeks – measurements of the risk involved in an options contract as it relates to certain underlying variables. Vega measures the sensitivity to the underlying instrument's volatility. Delta measures the sensitivity to the underlying instrument's price. Gamma measures the sensitivity of delta in response to price changes in the underlying instrument. Theta measures the time decay of the option.

Vega Neutral
A method of managing risk in options trading by establishing ... 
Lambda
The ratio of the percentage change in an option contract's price ... 
Speed
The rate at which the gamma of an option or warrant will change ... 
Color
The rate at which the gamma of an option or warrant will change ... 
Gamma Neutral
A method of managing risk in options trading by establishing ... 
Vomma
The rate at which the vega of an option will react to volatility ...

Investing Basics
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Term
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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 >> 
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 >> 
Why does delta only range from 1 to 1?
Learn what the option Greek delta is, what affects the value of delta for an option and why the delta of an option can only ... 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 are Bollinger Bands® used in options trading?
Use Bollinger Bands to identify volatility changes and place options trades at the right time; profit in bull or bear markets ... Read Answer >> 
How do I measure option liquidity?
An option is a financial instrument that gives the holder the right to purchase shares in a company at a certain set price ... Read Answer >>