Vega (Options Greek)
Measures sensitivity to implied volatility - how much an option's price changes when IV moves by 1%.
Formula
Vega = Change in Option Price / 1% Change in IV
More Details
What is Vega?
Vega measures sensitivity to implied volatility (IV). It tells you how much an option's price will change when IV moves by 1 percentage point.
Learn more: Options Greeks Guide | Greeks Analysis | Options Intraday Charts
Vega Direction
- Positive Vega: Long options you benefit when IV rises
- Negative Vega: Short options you benefit when IV falls
Vega Interpretation
A portfolio Vega of +650 means a 1% increase in IV across your positions adds approximately 650 dollars to your portfolio value.
When Vega Matters Most
- Before Earnings: IV typically rises into announcements
- After Earnings: IV typically "crushes" after the event
- VIX Spikes: Market-wide volatility increases
- Low IV Environment: Options are cheap, Vega exposure increases
Vega by Expiration
- Longer-dated options: Higher Vega (more time for volatility to impact)
- Short-dated options: Lower Vega (less time remaining)
Volatility Trading
| View | Position | Vega |
|---|---|---|
| IV will rise | Long straddles/strangles | Positive |
| IV will fall | Short straddles/credit spreads | Negative |
TradesViz Net Vega
The Options Command Center aggregates Vega across all positions, showing your overall volatility exposure.
Where to find it in TradesViz
Options > Options Command Center displays Net Vega across all positions. Positive Vega benefits from IV rise, negative benefits from IV fall. Monitor Vega exposure around earnings and VIX spikes. Individual trade Vega in Trade Explore.
Example
An option with 0.15 Vega gains 15 dollars per contract when IV rises 1%.