A very popular method of managing options trades, particularly complex ones, is the Greeks. The “Greeks” that we use are Delta, Gamma, Theta, and Vega. Delta tells us the rate of change and the profit and loss of our position for the next point move in our underlying. It gives us a number that tells us what that change will be. Gamma tells us how much the Delta will change after a one point and can also be beneficial in letting us know how fast things may be moving for or against us. Theta And then, Theta which is a popular one for Sheridan mentoring traders, who want to be positive Theta, shows the effect of time in either benefiting or detracting from your option position p&l. Vega of course monitors the volatility of our position and the effects that implied volatility changes will have on our position. It also is a number that tells us how much profit or loss our position will have with a one-point move in the implied volatility of the options that we are trading, but keep in mind that there is more to the management of options than just using the Greeks. Many times […]