Philosophy gets complicated. Categorical imperatives. Dialectical materialism. The mind-body problem.
You know what else gets complicated? Options pricing. It's no surprise, therefore, that there are two main places where Greeks get a lot of attention: philosophy and options pricing (and salads, we guess, but those aren't very complicated, so it kind of ruins the little rhetorical thing we're trying to do here).
In option trading, the Greeks describe the relationships of various measures connected to an option's price. Omega represents a particular kind of Greek. It tracks the percentage change in an option's value compared to the percentage change in the value of the underlying asset.
As Greeks go (option-related Greeks, that is), Omega is relatively easy to compute. You have an option to purchase 100 shares of AMZN at $1,800, expiring in two months. AMZN, in this case, represents the underlying asset. Its share price rises 12%. Your option price rises 10%. The Omega for that situation is 10% over 12%, or 0.833. You'd expect a 1% rise in AMZN's stock to lead to a 0.833% rise in your option price (or vice versa: a 1% decline would lead to a 0.833% fall in your option's price).
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Finance: What is a Derivative?23 Views
finance a la shmoop what is a derivative? well it's derived it's a something taken
from something else like a derivative of hot weather is thirst a derivative of [Girl takes sip of glass of water on a beach]
hunger is well you know crankiness that's diva thing you get there...
derivative of a 1/32 quarterback rating in the NFL is like serious wealth yeah
yeah discount double shmoop yeah look for it be on there with aaron
and a derivative of a stock or bond or other security is a something which
derives its value based on the performance of that underlying security
there are basically two flavors of derivative put options ie the right to [Ice cream flavors appear]
sell a security at a given price over a given time period and a call option, ie
right to buy a security at a given price over a given time period
well the price of that option is derived from the price of the security and a few
other factors like strike prices and duration and all that stuff
colonel electric the downgraded new version of General Electric is trading [Colonel Electric appears in a suit]
for 25 bucks a share a derivative of its share price is sold in the form of a
call option with a $30 strike price expiring about 90 days from now on the
third Friday of the end of that month well investors pay a price albeit
probably a small one for the right to then pay 30 bucks a share for colonel [Call option appears for colonel electric]
electric at any time in the next 90 ish days until that option expires making the bet
that the stock will go well above 30 bucks a share in that time period that
call option is thus a derivative of the colonel electric primary stock price got
it if you really want to get personal well here's the ultimate form of
derivative [Baby laying down]
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