What is derivatives? explain option greeks .

Question

Accepted Answer

Derivatives are financial contracts that derive their value from an underlying asset. Option Greeks are measures of an option's sensitivity to various factors.

Derivatives can be used for hedging or speculation.
Option Greeks include Delta, Gamma, Theta, Vega, and Rho.
Delta measures the change in option price for a change in the underlying asset price.
Gamma measures the change in Delta for a change in the underlying asset price.
Theta measures the change in option price for a change in time to expiration.
Vega measures the change in option price for a change in volatility.
Rho measures the change in option price for a change in interest rates.

Accepted Answer

Derivatives are financial contracts which derive its value from some underlyingassets, here actual assets are not transfer but a contract between seller and buyer is signed. If with in the time frame of the contract price move in favour of the buyer then seller will pay the difference amount and will suffer the loss.

Now call and put is a kind of derivative contracts which is known as option and which is affected by certain factors known as option greeks:-

Option Greeks are measures of an option's sensitivity to various factors..

Option Greeks include Delta, Gamma, Theta, Vega, and Rho.

Delta measures the change in option price for a change in the underlying asset price.

Gamma measures the change in Delta for a change in the underlying asset price.

Theta measures the change in option price for a change in time to expiration.

Vega measures the change in option price for a change in volatility.

Rho measures the change in option price for a change in interest rates.

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What is derivatives? explain option greeks .

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