Black-Scholes Definitions

Return

In mathematical finance, the Greeks are the quantities representing the sensitivities of derivatives such as options to a change in underlying parameters on which the value of an instrument or portfolio of financial instruments is dependent.

Delta - Measures the change in option price change when the stock price increases by $1.

Gamma - Measures the change in delta when the stock price increases by $1.

Vega - Measures the change in option price when the volatility increases 1%.

Theta - Measures the change in option price when the time to maturity decreases by 1 day.

Rho - Measures the change in option price when the interest rate increases 1%.

Psi -Measures the change in option price when the continuous dividend yield increases 1%.