what is kappa 
kappa is the measurement of an option contract s price sensitivity to changes in the volatility of the underlying asset volatility accounts for recent changes in price historical changes in price and future price moves for a trading instrument like an option volatility is intended to capture the amount and speed at which the price moves up and down understanding kappakappa also called vega is one of the four primary greek risk measures so named after the greek letters that denote them since vega is not actually a greek letter the v in vega stands for volatility just as the t in theta stands for time it is sometimes referred to as kappa the prices of options contracts are influenced by a number of different factors the option greeks are four ways of measuring factors that influence the price of options traders use these measures when analyzing options this set of risk measures kappa theta gamma delta indicates how sensitive an option is to time value decay changes in implied volatility and movements in the price of its underlying security kappa measures risk by calculating the amount that an option contract s price changes in reaction to a 1 change in the implied volatility of the underlying asset by establishing a neutral position a trader can hedge against some of the implied volatility kappa is higher the further away an option s expiration date is kappa falls as the expiration date approaches because the price of an option becomes more sensitive to the price volatility of the underlying asset as its expiration date gets closer options that are expiring immediately have negative kappa this is because options that are expiring in the future have greater premiums assigned to them than those options that expire immediately 