Vega

How much an option’s price changes when implied volatility rises or falls by one point.

Vega measures how much an option's price moves when implied volatility changes by one percentage point. If a call has a vega of 0.12, a one-point rise in implied volatility adds roughly 12 cents to its premium, all else being equal. Both calls and puts have positive vega, so higher expected volatility inflates every option you own.

In practice, traders watch vega because you can be right about direction and still lose money when volatility drops. This often happens after an earnings report: the event passes, implied volatility collapses, and the option you bought loses value even though the stock moved your way. That well-known trap is called the volatility crush.

A common mistake is buying options right before earnings without checking that implied volatility is already elevated. If you want long vega, you generally want to enter when volatility is cheap, not when everyone has already bid it up. If you expect volatility to fall, a short-vega position such as a credit spread fits the view better.

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Educational use only. Quotes are delayed ~15 minutes and nothing here is financial advice. Options trading involves substantial risk of loss.