January 2011
Beginner
800 pages
23h 56m
English
book
Introduction to Trading and Investing with Options (Collection)
by Guy Cohen, W. Edward Olmstead, Michael C. Thomsett
Content preview from Introduction to Trading and Investing with Options (Collection)
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Vega K (also known as Kappa or Lambda)
Remember from Chapter 1, "Introductions to Options," that there are seven factors that influence an option's price:
- The type of option (call or put)
- The price of the underlying asset
- The exercise price (or strike price) of the option
- The expiration date
- Volatility—Implied and Historical
- Risk-free interest rate
- Dividends and stock splits.
Memory Tip
Vega starts with a V and stands for Volatility.
When you trade stocks, you must be aware of volatility. Volatility is a measure of how a security's price is moving. Volatility is recognized as a measure of risk. If a stock price fluctuates all over the place in wild swings, then you'd find it uncomfortable because you wouldn't have a clue what it was going ...
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