__If you’re an options trader, you may have heard about “Greeks,” but perhaps you don’t know exactly what they are or, more importantly, what they can do for you.__

To discuss volatility spreads, it is important to discuss greeks. Various risk variables attached to an option position are typically associated with Greek symbols. Each greek symbol is based on assumptions based on various things like correlations between themselves as well.

Each greeks have a different meaning and importance and are used by traders to assess the risk of their position or portfolio and to estimate the outcomes of the payoff graph.

In short, it gives us a mathematical understanding. Greeks are calculated using a theoretical options pricing model.

Delta, Gamma, Theta, and Vega – which are the first partial derivatives of the Black Scholes options pricing model are the more common ones.

Effects on Greeks

Options Pricing Model