Vega (or kappa) is the sensitivity of an option's premium to variations in the implied volatility at which the option is quoted. It measures (at a specific time in the market) how an option's premium would change if the implied volatility of the underlying asset were to vary at the option's maturity by 1 vega.
- If the volatility goes up, the premium goes up (the portfolio is revalued).
- If the volatility goes down, the premium decreases (the portfolio depreciates).
The variation in volatility is measured in vegas, with 1 vega being 1%.
You might also be interested in
BBVA Securities AccountInvest in stocks and securities from the major markets and in an extensive catalog of investment funds managed by the most prominent international managers.
BBVA Stock BrokerOnline service that lets you invest in Continuous Market stock from €5 fee per transaction.
BBVA Dividend Reinvestment AccountGet the best yields from your stock dividends. No administration or maintenance fees.