Vega

Vega measures how much an option's price changes for every 1-point (1%) increase in implied volatility. It's always positive for long options and negative for short options.

An option with a vega of 0.10 gains $10 in value per contract for every 1% rise in IV, and loses $10 for every 1% fall.

Why it matters: Vega tells you how sensitive your position is to changes in implied volatility. Understanding your vega exposure is especially critical around binary events like earnings, where IV can spike sharply before the announcement and collapse immediately after (IV crush).

Long options = positive vega: You benefit from rising IV. Buying before a volatility expansion (like an earnings event or macro catalyst) gives you positive vega exposure.

Short options = negative vega: You benefit from falling IV. Selling options after IV has spiked (high IV rank) profits from the subsequent IV contraction.

Vega by time to expiry: Longer-dated options have higher vega than short-dated options. A 180-day option is far more sensitive to IV changes than a 7-day option. This is why LEAPS are heavily influenced by IV movements.

Example: You buy a straddle before earnings with a combined vega of 0.25. IV rises 8 points in the days before the announcement. Your position gains $200 per contract from vega alone, before the stock moves at all. After earnings, if IV crushes by 30 points, you lose $750 per contract from vega.

Related terms: IV crush, implied volatility, IV rank, theta, LEAPS

Try it on Stryke: Monitor vega exposure across your positions in the Options Screener.