Option Risk Parameters – Option Greeks
Just like in Indian Astrology, in horoscope when all the planets (Venus, Saturn, Rahu, Ketu) reside in their appropriate houses out of the 12 houses, it brings fortunes for you, same is the case of trading in Options. When all these Option Greeks behave as per expectations, you can make a lot of money in Option Trading
The following types Option Risk Parameters or Option Greeks available:
Delta of an Option is similar as Beta of a Stock as both measure the correlation of the instrument movement with respect to another instrument.
Profit & Loss Graphs:
Here anything above the x-axis on y-axis is a profit and anything below the x-axis on y-axis is a loss. X-axis gives the price of underlying stock.
Option Pay Off Diagram:
Break-even Point = Strike Price + Premium Paid= The Stock price at which an option strategy results in neither loss not a profit.
Volatility = It is a measure of the fluctuation in the market price of the underlying security.
Read more about various Options Trading Strategies below:
Bear Call Spread, Bear Put Spread, Bull Call Spread, Bull Put Spread, Cash-Backed Call, Cash-Secured Put, Collar, Covered Call, Covered Put, Covered Ratio Spread, Covered Strangle, Long Call, Long Call Butterfly, Long Call Calendar Spread, Long Call Condor, Long Condor, Long Iron Butterfly, Long Put, Long Put Butterfly, Long Put Calendar Spread, Long Put Condor, Long Ratio Call Spread, Long Ratio Put Spread, Long Stock, Long Straddle, Long Strangle, Naked Call, Naked Put, Protective Put, Short Call,Short Call Butterfly, Short Call Calendar Spread, Short Condor, Short Iron Butterfly, Short Put,Short Put Butterfly, Short Put Calendar Spread, Short Stock, Short Straddle, Short Strangle, Short Ratio Call Spread, Short Ratio Put Spread, Synthetic Long Put, Synthetic Long Stock, Synthetic Short Stock