Vanna is the sixth options greek to be discussed in my series of articles explaining the options greeks. From this point on, the options greeks become a little more obscure. However, if you are making a trade that involves one of the lesser used options greeks (such as a delta hedged position trade), you will need to know about them.

As a trader from Deutsche Bank once said about some of the more obscure options greeks (including vanna):

If you don’t incorporate them into your pricing functions, you’ll enjoy extreme but brief popularity, sell lots of cheap exotic options, and then go spectacularly bust.

Therefore, my explanation of vanna will explain what vanna represents, and how vanna is used to determine how the delta or vega of an options or warrants contract will change as the volatility or price of its underlying market changes, so that you can avoid going "spectacularly bust".

Gamma (Γ) is the fifth options greek to be discussed in my series of articles explaining the options greeks. My explanation of gamma will explain what gamma represents, and how gamma is used to determine how the delta of an options or warrants contract will change as the price of its underlying market changes.

... and the next minute, they've repossesed your bentley, and your kids don't go to college.

This quote from Louis Winthorpe in the movie Trading Places illustrates quite well how a trading situation can change very quickly, and what was a profitable trade thirty seconds ago, is now on its way to becoming (or has already become) a losing trade. Given the volatile nature of trading, it is essential that traders are able to react to any new situations promptly, and adjust their trading accordingly. In other words, traders need to be able to exit their trades at any time, and cannot afford to be sentimental about any of their trades.

It seems like such an obvious thing to say "don't be sentimental about your trades", but sentimental trading is a common problem among new traders, and it therefore needs to be discussed. My discussion of sentimental trading explains what sentimental trading is, what causes it, and how it can be overcome, and is essential reading for all new traders (especially those who still have that moth eaten souvenir t-shirt from their holiday in Greece ten years ago).

There are several news releases from the US this week, and many news releases from Europe and Asia. The US only has two high volatility news releases, while Europe has five high volatility news releases, and Asia has six high volatility news releases. Due to the current market conditions, markets from all three regions will probably continue experiencing high volatility and significant price movement throughout this week.

The US, European, and Asian news releases for this week are as follows (all times are Greenwich Mean Time, which is 2 hours behind Central European Time, and 4 hours ahead of US Eastern Time) :

US

• Monday : PMI Non Manufacturing at 2:00 PM
• Tuesday : No News Releases
• Wednesday : G8 Meeting at ??:?? ?? (Unknown Time), Oil Inventories at 2:30 PM, Central Bank Report at ??:?? ?? (Unknown Time), FOMC News Conference at 4:55 PM, and Consumer Credit at 7:00 PM
• Thursday : G8 Meeting at ??:?? ?? (Unknown Time), Unemployment Claims at 12:30 PM, FOMC News Conference at 1:00 PM, Wholesale Inventories at 2:00 PM, and Natural Gas Storage at 2:30 PM
• Friday : G8 Meeting at ??:?? ?? (Unknown Time), Trade Balance, and Import Prices at 12:30 PM, and Consumer Sentiment, and Inflation Expectations at 1:55 PM

• This week's US news releases that should cause high volatility are shown in bold type. There are several US news releases this week, but only two high volatility news releases. However, due to the current market conditions, the US markets will probably continue experiencing high volatility and significant price movement throughout this week.

Europe

• Monday : UK HPI at ??:?? ?? (Unknown Time), and EU Investor Confidence at 8:30 AM
• Tuesday : France Trade Balance at 6:45 AM, UK Manufacturing Production, and Industrial Production at 8:30 AM, Germany Factory Orders at 10:00 AM, and UK Consumer Confidence, Shop Price Index, and GDP at 11:01 PM
• Wednesday : Switzerland Unemployment Rate at 5:45 AM, G8 Meeting at ??:?? ?? (Unknown Time), EU GDP at 9:00 AM, and Germany Industrial Production at 10:00 AM
• Thursday : G8 Meeting at ??:?? ?? (Unknown Time), Germany CPI, and Trade Balance at 6:00 AM, EU Central Bank Bulletin at 8:00 AM, UK Trade Balance at 8:30 AM, UK Leading Index at 9:00 AM, UK MPC Rate at ??:?? ?? (Unknown Time), and UK Official Bank Rate at 9:00 AM
• Friday : G8 Meeting at ??:?? ?? (Unknown Time), Germany WPI at 6:00 AM, France Industrial Production, and Budget Balance at 6:45 AM, Italy Industrial Production at 8:00 AM, and UK PPI at 8:30 AM

• This week's European news releases that should cause high volatility are shown in bold type. There are many European news releases this week, and five high volatility news releases. Due to the current market conditions, the European markets will probably continue experiencing high volatility and significant price movement throughout this week.

Asia

• Monday : Australia Inflation Gauge at 12:00 AM, Australia Job Advertisements at 1:30 AM, Japan Leading Indicators at 5:00 AM, New Zealand Business Confidence at 10:00 PM, and Australia Construction Index at 11:30 PM
• Tuesday : Australia Cash Rate, and Central Bank Rate at 4:30 AM, and Japan Machinery Orders, Bank Lending, Current Account, and Money Stock at 11:50 PM
• Wednesday : Australia Consumer Sentiment at 1:00 AM, Australia Home Loans at 1:30 AM, Japan Economy Watchers' Sentiment at 5:00 AM, and G8 Meeting at ??:?? ?? (Unknown Time)
• Thursday : Australia Inflation Expectations at 1:00 AM, Australia Employment Change, and Unemployment Rate at 1:30 AM, G8 Meeting at ??:?? ?? (Unknown Time), Japan Machiner Tool Orders at 6:00 AM, and Japan CGPI at 11:50 PM
• Friday : G8 Meeting at ??:?? ?? (Unknown Time)

• This week's Asian news releases that should cause high volatility are shown in bold type. There are many Asian news releases this week, and six high volatility news releases. Due to the recent market conditions, the Asian markets will probably continue experiencing high volatility and significant price movement throughout this week.

Rho (ρ) is the fourth options greek to be discussed in my series of articles explaining the options greeks. My explanation of rho will explain what rho represents, and how rho is used to determine how an options or warrants contract will react to changes in the risk free interest rate (i.e. the rate of return of a risk free trade).

Vega (c) is the third options greek to be discussed in my series of articles explaining the options greeks. Vega is an important options greek for options strategies that are sensitive to volatility (e.g. straddles), but vega is not used as often as delta or theta. My explanation of vega will explain what vega represents, and how vega is used to determine how an options or warrants contract will react to changes in its underlying market's volatility.

In most of my articles about options and warrants, I refer to options and warrants as though they are interchangeable (interchangeable, not fungible), but in my recent article about short options risk I only referred to options, and never actually mentioned warrants, and with good reason.

The article about short options risk does not apply to warrants, because warrants cannot be traded short (i.e. cannot be sold naked). Warrants can (and often should) be used to make short trades on their underlying markets (e.g. buying a put warrant that is based upon a stock index), but they cannot be traded short as an independent trade.

The reason that warrants cannot be traded short is that they are not a contract between two traders (as options are), but are a contract between the warrant issuer (financial companies such as Deutsche Boerse and BNP Paribas) and the trader. Unlike options, where the terms of the options contracts are set by the exchange that offers the options markets, the warrant issuers get to set the terms of the warrants contracts.

So, while options and warrants are interchangeable in most respects (e.g. the same underlying markets, the way that they are traded using calls and puts, etc.), they are not interchangeable when it comes to short options trades, for which actual options must be used.

There are several news releases from the US and Asia this week, and many news releases from Europe. The US has six high volatility news releases, while Europe has seven high volatility news releases, and Asia has five high volatility news releases. Regardless of the distribution of the news releases, markets from all three regions will probably continue experiencing high volatility and significant price movement throughout this week, due to the current market conditions. Note that Friday is a holiday in the US, so US markets will either be closed, or will have very low trading volume.

The US, European, and Asian news releases for this week are as follows (all times are Greenwich Mean Time, which is 2 hours behind Central European Time, and 4 hours ahead of US Eastern Time) :

US

• Monday : No News Releases
• Tuesday : HPI at 1:00 PM, PMI at 1:45 PM, and Consumer Confidence at 2:00 PM
• Wednesday : FOMC News Conference at 1:00 AM, Job Cuts at 11:30 AM, Non Farm Employment Change at 12:15 PM, PMI Manufacturing, Pending Home Sales, Construction Spending, and Manufacturing Prices at 2:00 PM, Oil Inventories at 2:30 PM, FOMC News Conference at 3:15 PM, and Vehicle Sales at ??:?? ?? (Unknown Time)
• Thursday : Non Farm Employment Change, Unemployment Rate, Average Hourly Earnings, and Unemployment Claims at 12:30 PM, Factory Orders at 2:00 PM, and Natural Gas Storage at 2:30 PM
• Friday : No News Releases

• This week's US news releases that should cause high volatility are shown in bold type. There are several US news releases this week, and six high volatility news releases. Due to the current market conditions, the US markets will probably continue experiencing high volatility and significant price movement throughout this week, with the exception of Friday which is a holiday in the US.

Europe

• Monday : UK Lending To Individuals, and Mortgage Approvals at 8:30 AM, EU Consumer Confidence at 9:00 AM, and UK Consumer Confidence at 11:01 PM
• Tuesday : Switzerland Consumption Indicator, and UK HPI at 6:00 AM, Germany Unemployment Change at 7:55 AM, EU Money Supply, and Private Loans at 8:00 AM, UK Current Account, GDP, and Business Investment at 8:30 AM, EU CPI, and Italy CPI at 9:00 AM, and UK MPC News Conference at 9:30 AM
• Wednesday : Germany Retail Sales at 6:00 AM, Switzerland PMI at 7:30 AM, EU PMI Manufacturing at 8:00 AM, UK HPI at ??:?? ?? (Unknown Time), and UK PMI Manufacturing, and Services Index at 8:30 AM
• Thursday : Switzerland News Conference at 6:30 AM, UK MPC News Conference at 8:25 AM, UK Credit Conditions, PMI Construction, and MPC News Conference at 8:30 AM, Switzerland Central Bank Bulletin, EU PPI, and EU Unemployment Rate at 9:00 AM, EU Minimum Bid Rate at 11:45 AM, and EU Central Bank News Conference at 12:30 PM
• Friday : Switzerland CPI at 7:15 AM, EU PMI Services at 8:00 AM, UK PMI Services, and Housing Equity Withdrawal at 8:30 AM, and EU Retail Sales at 9:00 AM

• This week's European news releases that should cause high volatility are shown in bold type. There are many European news releases this week, and seven high volatility news releases. Due to the current market conditions, the European markets will probably continue experiencing high volatility and significant price movement throughout this week.

Asia

• Monday : Japan PMI Manufacturing at 11:15 PM, and Japan Household Spending, and Unemployment Rate at 11:30 PM
• Tuesday : Australia News Home Sales at ??:?? ?? (Unknown Time), Australia Private Sector Credit, and Japan Average Cash Earnings at 1:30 AM, New Zealand Business Confidence at 3:00 AM, Japan Housing Starts at 5:00 AM, Australia Manufacturing Index at 11:30 AM, and Japan Manufacturing Index, and Non Manufacturing Index at 11:50 PM
• Wednesday : Australia Building Approvals, and Retail Sales at 1:30 AM, Australia Commodity Prices at 6:30 AM, and Japan Monetary Base at 11:50 PM
• Thursday : Australia Trade Balance at 1:30 AM, New Zealand Commodity Prices at 3:00 AM, and Australia Services Index at 11:30 PM
• Friday : No News Releases

• This week's Asian news releases that should cause high volatility are shown in bold type. There are several Asian news releases this week, and five high volatility news releases. Due to the recent market conditions, the Asian markets will probably continue experiencing high volatility and significant price movement throughout this week.

Theta (Θ) is the second options greek to be discussed in my series of articles explaining the options greeks. Theta is also one of the most useful options greeks, and the information that it represents can be important, however, theta is not used as often as delta. My explanation of theta will explain what theta represents, and how theta is used to determine how an options or warrants contract will behave over time.

Delta (Δ) is one of the most useful options greeks, and hence it is the first one to be discussed in my series of articles explaining the options greeks. If you are an options trader, or a trader that trades options or warrants as an efficient (i.e. leveraged) way of trading their underlying markets, delta should be an important part of your trading. My explanation of delta will explain what delta represents, and how delta is used to choose the most suitable options or warrants contracts for your trades.