<p><strong>Vega</strong> is the sensitivity of an option's price to changes in the underlying asset's <a href="/NewSite/encyclopedia/volatility/" class="ency-link">volatility</a>. It measures how much the option's price will change for a 1% move in implied volatility.</p>
<p>Vega matters because it helps traders understand and manage the risk of changes in volatility. For instance, a high vega value indicates that the option's price is sensitive to changes in volatility, making it riskier but potentially more profitable if volatility increases. Conversely, a low vega value suggests the option's price is less affected by volatility changes.</p>