VEGA
AdvisorShares STAR Global Buy-Write ETF
stock NYSE ETF

Vega is the Greek that represents how the price of an option move given a move on IV, now, IV changes when the option price changes, in a black scholes model, it is S D(T) * N(D1). Now if you go further D1, depends on price, so at the end of the day… VEGA DEPENDS ON Price, volatility, interest rate and strike. As the only thing that moves there is price… guess what? It is a sensitivity on price movement (not linear tho), probably a 4th order (squared of the square). So that’s the difference of book smart vs. an experience person using the actual Greek.

Vega is the Greek that represents how the price of an option move given a move on IV, now, IV changes when the option price changes, in a black scholes model, it is S D(T) * N(D1). Now if you go further D1, depends on price, so at the end of the day… VEGA DEPENDS ON Price, volatility, interest rate and strike. As the only thing that moves there is price… guess what? It is a sensitivity on price movement (not linear tho), probably a 4th order (squared of the square). So that’s the difference of book smart vs. an experience person using the actual Greek.