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Vega

Option sensitivity measuring value change for a move in implied volatility, holding other factors constant.

Vega is a derivative sensitivity measure that quantifies how the value of an option changes in response to changes in the implied volatility of the underlying asset.

For example, an oil option with a vega of 0.5 will gain $0.50 in value for every 1% increase in the implied volatility of the underlying crude.

Vega is essential for options pricing, risk management, and trading strategies. It helps traders assess exposure to volatility shifts and design hedging or speculative positions.

Understanding vega enables market participants to anticipate how option values react to changing uncertainty, improving strategy execution and financial risk control.

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