The Greeks - Stock Option Price Factors Explained
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- Опубликовано: 31 июл 2024
- The first 1,000 people to use this link will get a 1 month free trial of Skillshare: skl.sh/theplainbagel01221
Intro: 00:00
Options Overview: 02:10
Delta: 02:42
Gamma: 04:00
Theta: 05:00
Vega: 05:50
Rho: 07:32
Options Explained: • Before You Buy a Stock...
Today we discuss the Greeks, a set of variables that helps explain why exactly options move up and down in value as they do.
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DISCLAIMER:
This channel is for education purposes only and does not constitute financial advice - Richard is not responsible for investment actions taken by viewers. Please seek out a registered advisor if you require assistance (while Richard is a registered portfolio manager at WDS Investment Management, he does not provide advice through The Plain Bagel, which is not affiliated with his employer).
this background is actually pretty easy on the eye.
I think we're doing pretty good with Greek letters at this point in 2022 lol
Is this a covid joke?
@@Quroe_ It is indeed
@@Quroe_ No it’s an alpha, beta, sigma male joke
I like to think of delta and gamma as speed and acceleration:
Delta = the current rate of change - similar to speed (m/s)
Gamma = the rate of change of delta, similar to the change in speed I.e. acceleration (m/s/s)
Theta = gasoline
That's precisely what it is. You actually need calculus in order to chart the gamma of a given security.
That helps, thanks!
I love that you went back to the background. It looks so good.
The best, most concise explanation I've seen. Thank you.
Awesome video. The most intuitive understanding I ever seen.
Remember that I deal with greeks at my university when we studied mathematical finance at our master program. Thanks for your Awesome video
Thank you for making these
Excellent video!
Thank you for another informative video
Great video thanks , so well explained
Everyone: why New dumbhell NFTs are soaring today? [cringe face on the thumbnail]
PLAINBAGEL: THE GREEKS
This channel is gold
Exactly what i needed
Thank you! This will help me with my options plays.
Amazing video as always!
I will go out on a limb here and say that most options traders I've met don't know much about "the greeks". :D
You're meeting the wrong ones
Options traders are on a wide spectrum; you have your risk-averse people who only write covered calls on blue chips, and then you have the people who buy dirt cheap short duration OTM calls/puts on meme stocks haha
Would love to see a video on how implied volatility is calculated
ruclips.net/video/VIHldsSmASU/видео.html
That is a quite advance topic. It uses the Black - Scholes model. But this dude is really really good explaining complicated topics in pain english so yeah, that would be nice!
Good explanation and I loved the puns! lol
Super helpful video! I've heard the term before in my current job, but since I work on the tech side of finance, I didn't really know what these different measures meant.
Thanks dude
Finally - I've been waiting for this.
Wonder what took you so long! Thank you ❤
Anyone please recommend a regulated option broker (with low fees) accessible to South Africans? Been failing on my search.
Happy Friday everyone! The first 1,000 people to use this link will get a 1 month free trial of Skillshare: skl.sh/theplainbagel01221
THANK YOU! FINALLY!!!!
Can they be used to filter and find good options to trade? Anyone knows any tools or guide lines on how to use Options Greeks for entering a trade either long or short? Kind of what values to look for in each or all of them to enter or exit a trade?
I always find it funny that the symbol for Vega is actually called ni in Greek and more closely resembles n in sound.
Source: I'm Greek
would it be safe to say that buying options in the evening is a bad idea overall if planning to day trade due to daily theta pretty much almost up? also on fridays in the last couple hours of the day and a theta of lets say .15. would i be pretty much underwater of .45 cents being that weekend theta loss aswell as fridays is working against me?
So traders wanted to use first and second derivatives but gave them complicated-sounding names, and they renamed nu to vega because it looks like a v…
One tiny correction, not to the substance but to your sponsor message- "Deutsch" means German, not Dutch :D (Dutch in Dutch is "Nederlands")
What actions we can take based on greeks values ? Are there any channels that share that ?
Suddenly Rho has become soooo important.
Please talk about xrp and if it will become fedcoin to pay us gov dept?
Actuaries seeing this video are all getting excited
Lmao😂
θ gang reporting in!
Great Video!
Covered calls are my favorite! On long positioned stocks. I don't care if I'm locked in a losing position that I believe in.
If you sell a cc and the stock rises, you may lose on a portion of the gain. But, time is on a person's side more often than not when writing CCs with short expiration dates.
Delta curve graph would have been helpful in my opinion, to show the effect of gamma; and a theta curve graph to show that it’s non linear. But anyway great video.
Meme material at 6:49 with good pause timing.
Is it weird, that i bounce between Richard and KamikazeCash for investment basics?
why is it called vega when the actual letter is pronounced "ni"?
Because that is the way we say it in Amurica and if you don't like it GTFO
@@eddenoy321 are you for real? Maybe don't use greek letters if you are that insecure
Vega isn't a greek letter.
@@JayLinkinGrylls When Amuricans speak Greek we speak it anyway we please. Go back to your home country, commie !
The rise of stock options has also rose the average level of the VIX. I also saw a study that said the more attention a stock gets in the news and social media, the higher it's implied volatility will be relative to its realized volatility.
Yeah that makes sense since more media attention for a given security generally leads to more interest in retail trading in that security. Since retail trading isn't the most sophisticated (to put it politely), there will undoubtedly be more volatility for the security in question.
Thanks for the work done on the video, I want to be an investment analyst, could you recommend me some books to be more efficient when analyzing companies?
I'm still 17 years old but you know what they say the faster you start the better
Video suggestion: how to trade the difference between implied volatility & historical volatility.
Indeed !
India is watching!
What’s vega? I know the whole Greek alphabet and that’s not a letter I’ve heard of. That symbol is nu
In the video he says "not actually a Greek letter" I guess because it describes volatility the name vega stuck around because it's more familiar to English speakers than saying "ni"
The more i learn about investments and options, the more I understand that nobody really knows everything and it's a little disconcerting.
When the option moves less in price then the stock with a delta between 0 and 1, why would someone choose to invest in the call option rather then the stock?
Are the price of the options much lower, so that the profit comes from buying 100 options at the same price as 1 stock, so the smaller movement ind the price of 1 options multiplied by the number of options makes is profitable?
I have never bought or sold options and I don't plan to. I'm just curious how they work.
It's may seem a bit misleading but since an option controls 100 shares of a stock we have to multiply that return on the option price by 100 to get the real return. Using the example in the video where the option increased in price by .20c when the stock moved $1, that would actually make your entire option worth $20 more! This is known as option leverage and it's why when investors are relatively confident about which way a stock will move, it can make options more desirable. This leverage goes both ways however so it common to see options traders lose their entire position if the stock makes an undesirable move. It's a bit complicated but I hope that makes sense! :)
Edit: missed a zero
@@noahwillard4881 that's $20 not $2
@@88Nieznany88 oops! Missed a zero
Yep it's because purchasing options creates a lower drag on cash compared to buying the actual shares at the current market prices.
The idea is that you would have the required money available by then.
Four Economic sectors. Primary, Secondary, Tertiary, Quaternary.
Is there a chart or website or channel, that breaks down WHAT time of year each sector is at its strongest?
As well as a chart that shows historical data Year by year for each sector performance?
theata gang gang
The explanation is understandable, but it's not clear how an investor will use this info to make a decision or gain intuition.
6:48
I have a question. What if share fall to 0!! And how can we say with guarantee that strong fundamentals wouldn't fail or wouldn't go to zero. Why? Is there any reason why? Could you please answer my question
The only way a stock goes to true zero is if the IPO was a scam or if a bankruptcy court cancels shares in order to pay bond holders with the liquidation money. Why? Because being at zero means that no one would even pay a dollar for all the shares in existence.
As for ordinary companies, if a stock price falls too low, a computer will see the opportunity and automatically buy it up before you can even open the ap and see the problem. The guy using the computer isn't worried because he knows even if a company is liquidated tomorrow he should get a fair payoff if he bought at a good price.
second
Basically it’s a different symbols explaining how you gonna lose money
thank you so much! I can never remember these lol
Back test option strategies. All the "strategies" underperform buy and hold over time.
How? Historical options prices aren't easy to find like stock prices.
Options are betting not investing.
The only reason to buy Is to hedge the portfolio
I disagree, they can be a cheap way to get leverage on a position through LEAPs
@@dylan7476 how you can be sure to exactly the stock price in an exact days.
Is too much Easy to fail, because market is not predicatble.
@@castroganlecar4854 then you can simply roll the option, or start off by buying a longer term option.
Fun fact, vega is not a Greek letter ;-)
You should know: every time you say 'We don't have time for' relating to a deep dive, we do have time! I, and I suspect many others, would stick around for long form educational content.
Make something 30 minutes long or more. See what happens ;)
So you know that he does?
Dude I'm Greek, what's "vager"
Theta Gang.
9:21 Oracles.. flying close to the sun... You are doubling down on Greek references, aren't you?
Timeo danaos et dona ferentes
All parameters seem local metrics in very non linear space ... Have to tread very very carefully... Seems like there is no other option
crap! you just explained an audio compressor...lol
That is “nu” not “Vega” (which is a star)
first
lol just kidding, love the vids bro
why tf is it called vega ?????????????????????
I don't understand a word.
🙄🤨😮💨...
Umm, Sir???
Please Pronounce the letters correctly!!!
ν= ne