OPT_BS_VEGA

OPT_BS_VEGA vega of a European option

Synopsis

OPT_BS_VEGA(spot,strike,time,rate,volatility,cost_of_carry)

Arguments

spot: spot price

strike: strike price

time: time to maturity in years

rate: risk-free interest rate to the exercise date in percent

volatility: annualized volatility of the asset in percent for the period through to the exercise date

cost_of_carry: net cost of holding the underlying asset (for common stocks, the risk free rate less the dividend yield), defaults to 0

Description

OPT_BS_VEGA uses the Black-Scholes model to calculate the 'vega' of a European option struck at strike on an asset with spot price spot. The vega of an option is the rate of change of its price with respect to volatility.

Note

Vega is the same for calls and puts. Vega is expressed as the rate of change of option value, per 100% volatility.