The Effects of Volatility on the Time Spread When Trading Options (4)

Although increasing, they do not progress in a linear manner.


When you check the same strike price out over future months you will notice that vega values increase as you move out over future months.


The at-the-money strike in any month will have the highest vega.


As you move away from the at-the-money strike, in either direction, the vega values decrease and continue to decrease the further away you get from the at-the-money strike.


Remember, vega (an option's volatility component value) is highest in at-the-money, out-month options.


Vega decreases the closer you get to expiration and the further away you move from the at-the-money strike.