Define the “Greeks” in Options Trading and Their Role in Risk Management

The Greeks are a set of risk measures that quantify the sensitivity of an option's price to changes in underlying factors. Delta measures price sensitivity to the underlying asset's price change.

Gamma measures the rate of change of Delta. Theta measures the rate of time decay.

Vega measures price sensitivity to changes in implied volatility. They are essential for traders to hedge their portfolios and manage risk exposure.