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What Are ‘Greeks’ in Options Trading and How Do They Measure the Risks in an Arbitrage Strategy?

Greeks are the risk dashboard for options, showing how price, time, and volatility changes will affect your position.
Greeks.Live23.11.25

What Are ‘Greeks’ in Options Trading and How Do They Measure the Risks in an Arbitrage Strategy?

The 'Greeks' are a set of risk measures that describe the sensitivity of an option's price to various factors. Delta measures the change in option price per one-point move in the underlying asset.

Gamma measures the rate of change of Delta. Theta measures the rate of price decay as time passes.

Vega measures sensitivity to changes in implied volatility. For an arbitrage strategy, a trader aims to be 'delta-neutral' (immune to small price moves) while managing Vega and Theta to profit from volatility or time decay discrepancies.

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