What Is the Impact of “Vega” on a Long-Term Option?
Vega measures the sensitivity of an option's price to a 1% change in implied volatility. Long-term options (those with a far expiration date) have a higher Vega than short-term options because there is more time for the implied volatility to change and impact the option's potential payoff.
Therefore, long-term options are more sensitive to changes in market sentiment regarding future price swings.
