15 lines
912 B
Plaintext
15 lines
912 B
Plaintext
Tweaking Greeks
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With this position, some risks are of greater concern than others. Kim may
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want more exposure to some greeks and less to others. What if she is
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concerned that her forecasted price increase will take longer than three
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weeks? She may want less exposure to theta. What if she is particularly
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concerned about a decline in IV? She may want to decrease her vega.
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Conversely, she may believe IV will rise and therefore want to increase her
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vega.
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Kim has many ways at her disposal to customize her greeks. All of her
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alternatives come with trade-offs. She can buy more calls, increasing her
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greek positions in exact proportion. She can buy or sell stock or options
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against her call, creating a spread. The simplest way to alter her exposure to
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option greeks is to choose a different call to buy. Instead of buying the ATM
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call, Kim can buy a call with a different relationship to the current stock
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price. |