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Day trading requires a basic foundation in mathematics to make informed decisions and manage risk effectively.  This guide will cover the essential mathematical knowledge and skills needed to succeed in day trading.   Key Takeaways – Math You Need to Know in Day Trading Expected value (EV) is an essential mathematical skill. A high probability […]

Spread trading in options is an approach to trading that involves simultaneously buying and selling multiple options contracts. These strategies are designed to help traders manage risk, capitalize on specific market conditions, and potentially profit from various scenarios while often limiting potential losses.   Key Takeaways – Spread Option Trading Strategies Risk-Reward Balance – Spreads […]

In the context of financial derivatives, Greeks are essential risk measures that help traders and analysts understand how various factors affect the value of an option or other derivative instrument. While single-asset Greeks are well-known and widely used, multi-asset Greeks are used when dealing with derivatives that depend on two or more underlying assets. Multi-asset […]

Fugit is a concept in options trading and risk management, particularly for American and Bermudan options. It provides information on the timing of option exercise and helps in hedging strategies. It’s considered a less traditional Greek.   Key Takeaways – Fugit (Option Greek) Fugit estimates the expected time to exercise for American and Bermudan options, […]

The elasticity of demand refers to the degree of responsiveness of the demand for a product or service to changes in its price. A good is considered to be elastic if an increase in its price results in a significant decrease in the quantity demanded, and vice versa. It is also referred to as “price […]

Ultima is a third-order derivative of the option value with respect to volatility. In other words, it’s an advanced option Greek that measures the sensitivity of an option’s Vomma (second-order sensitivity) to changes in volatility. This makes it one of the more complex Greeks used in options trading and risk management.   Key Takeaways – […]

Color, also known as gamma decay or DgammaDtime, is a concept in options trading, market making, and risk management.  It’s a third-order Greek measure that helps traders understand how the rate of change of an option’s Gamma varies over time.   Key Takeaways – Color (Option Greek) Color predicts daily Gamma changes, helping traders anticipate […]

Zomma, also known as DGammaDVol, is a third-order Greek letter used in options trading and risk management.  It measures the rate of change in an option’s Gamma with respect to changes in implied volatility.  Zomma is part of the family of Greek letters that help traders, market makers, and risk managers understand and quantify the […]

Speed is one of the lesser-known option Greeks. Speed quantifies how quickly an option’s Gamma changes as the price of the underlying asset moves. It’s the second derivative of the option’s Delta with respect to the underlying asset’s price. It’s often referred to as the “Gamma of Gamma” or DgammaDspot (i.e., measured how Gamma changes […]

Veta, also known as Vega in options trading, is one of the essential “Greeks” used in options pricing and risk management. It measures the sensitivity of an option’s price to changes in the underlying asset’s volatility. Understanding Veta is important for market makers, options traders, and risk managers who specialize in volatility and/or Theta strategies, […]