AdvancedMAD Academy0:46Derivatives

Four Numbers That Explain the Move

Delta, gamma, theta and vega each measure sensitivity to one thing, and together they explain why a correct call still lost money.

0:46 · 6 scenes

This lesson is part of a MAD Academy plan.

What the Lesson Covers

  1. 0:00Your call went up in price and lost money. The Greeks explain why.
  2. 0:05What each measures. Each one answers how much the option moves when one specific thing changes.
  3. 0:15Delta, two ways to read it. It is the move per dollar, and roughly the market's odds of finishing in the money.
  4. 0:24The one that catches people. Vega. Volatility collapsing after earnings can sink an option even on a correct call.
  5. 0:33How they interact. Gamma is largest near the strike and near expiry, which is where things move fast.
  6. 0:41Check all four before blaming direction.
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Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
Four Numbers That Explain the Move — MAD Academy Training Video · MadStockAlerts