What Is ‘Vega’ in Options Trading and How Does It Relate to Implied Volatility?

Vega is one of the 'Greeks' that measures an option's sensitivity to a one-unit change in implied volatility (IV). A high vega means the option price will change significantly if IV changes.

Vega is highest for at-the-money options and options with a long time to expiration. Traders use vega to manage their exposure to IV changes, buying vega when they expect IV to rise and selling vega when they expect it to fall.