Options

Question 1

a. Delta

Answer 1

gain/loss if stock goes up/down $1

Question 2

b. Gamma

Answer 2

rate of change between delta and the stock’s price

i. Every $1 is how much delta changes
ii. Delta gets changed by the gamma
iii. How much delta is going to change

Question 3

c. Theta

Answer 3

time decay of an option

i. Theta is per day

Question 4

d. Vega

Answer 4

how sensitive options are to changing volatility