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What a boring game all this would be if option prices showed no fluctuations! The price, or premium, of an option is constantly changing for whatever reason. As an options trader you must be prepared, armed with the knowledge of how an option price can react in certain scenarios. You can look at that from a reward or a risk perspective.
If you are relatively new to options, you may have heard the terms “delta” or “gamma” or several of the other Greek letters. These terms are used to measure how an option price can behave in certain environments.
This two part article (this being part one) seeks to explain “the Greeks” and more importantly give perspective to their relative importance in day to day option trading.
