Option Greek ~ Vega

Vega is again one of the most important Greeks

But unfortunately this most underrated/ignored Greek by many option buyers.

In simple terms Vega is amount of change is option price with respect to 1% change in Volatility. 

Volatility can be defined as change in price of underlying asset and with respect to speed. 

Vega increases with expectation of large movement in prices of underlying asset and falls once event gets over or near to contract expiry. 

Ideally options writers gives more important to Vega or Volatility while they enter into position whereas many retail buyers of the option do not have ample knowledge same and ultimately they end up in loss making trade despite of the fact underlying asset moves prices move in their favour.

In simple terms buyer of options should avoid when there is certain event and because of which volatility is certain. 

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