What are "the greeks" in options trading?

In options trading, "the greeks" refer to a set of metrics that quantify an option's sensitivity to various influencing factors. These measures help traders understand the risks and potential rewards associated with options positions. For instance, delta measures how an option's price is expected to change relative to a change in the price of the underlying asset, while gamma indicates how delta itself will change. Theta represents time decay, capturing the decrease in an option's value as it approaches expiration, and vega measures sensitivity to volatility in the underlying asset.

This understanding is crucial for traders seeking to manage their portfolios effectively and make informed trading decisions. The greeks provide valuable insights into how options might perform under different market conditions, facilitating better risk management and strategy formulation.