1.4.1 The Greeks Overview

How options pricing changes with changes in underlying spot, IV, and time has important implications for hedging activity in the market. These changes in price are referred to as “greeks.” They are so important in hedging that often participants will directly manage their risk based on their exposure to various greeks. What follows is a discussion about some of the more important greeks. While others exist, their influence on the market is small and in most cases can be ignored.