To The Moon

When markets get tense, implied volatility (IV) jumps—pushing option prices higher.

And here’s where Vega steps in: this Greek tells you exactly how shifts in IV ripple through option prices, making it a key tool for spotting whether an option is truly cheap or expensive.

📖 Let’s see how The Options Handbook explains Vega:

▶ What Vega means 🎯

Vega measures how your options react to changes in implied volatility, the market's pricing of uncertainty, not just price direction.

In simple terms: even if the stock price doesn’t move and only sentiment shifts first, Vega tells you how the option’s price will react.

▶ How to read high vs. low Vega? 🔍

• At-the-Money (ATM):

  Highest Vega, most sensitive to market mood.

• In-the-Money (ITM) & Out-of-the-Money (OTM): Lower Vega, pricing depends more on intrinsic or time value.

• Long-term options: Higher Vega, more sensitive to future uncertainty.

• Short-term options: Lower Vega, less affected by volatility.

▶ Practical strategies 💡

• With high-Vega options (e.g. long-term / ATM): you benefit if IV rises (before events, during fear).

• With low-Vega options: better if IV is expected to drop (calm markets, volatility contraction).

📘 The Options Handbook also explains Vega along with other Greeks, helping traders understand volatility better! Now available in the Tiger Coin Center! 🐯🛒

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