An contractual agreement to facilitate an asset transaction with an agreed price, quantity, and date.
A financial derivative based on underlying stock price. https://www.investopedia.com/terms/o/optionscontract.asp
Pricing
Options pricing is described by both the price of the underlying stock and a set of parameters that define how the contract price moves in relation to the stock price over time. These parameters are known as the options greeks or, simply, “the greeks”.
Delta
The number of currency units that the option would increase in price when the underlying stock price changes by one unit.
For example, if a call option of ACME Inc is valued at $4 with a delta of 0.70 (read “seventy”) and then the stock price of ACME Inc increases by $1, the value of the call option is now expected to be valued at $4.70.
Gamma
The rate of change of Delta.
For example, if a call option of ACME Inc is valued at $4 with a delta of 0.70 (read “seventy”) and then the stock price of ACME Inc increases by $1, the value of the call option is now expected to be valued at $4.70. If the gamma of the contract is 0.06 (read “six”), the delta will now be 0.76. When the stock price increases by another $1, the option will now be expected to be valued at $5.46 ($0.06 + $0.70 + $4.70).
Theta
The daily rate of increase of the option’s price. Will almost always be negative, as nearly all options contracts are subject to time decay.
For example, if a call option of ACME Inc is valued today at $4 with a theta of -0.10 (read “negative 10”), it’s expected to be valued at $3.9 (0.10) tomorrow, all things being equal.
Vega
The number of currency units that the option would change in price as the percentage of implied volatility of the underlying stock changes.
For example, if a call option of ACME Inc is valued today at $4 with a vega of 0.03 (read “three”), when the implied volatility of the underlying stock increases by 1%, the price of the option increases by 3 cents to $4.03.
https://www.youtube.com/watch?v=jN4QODy000Y https://www.investopedia.com/trading/getting-to-know-the-greeks/