Vega is a measure of an options contract’s sensitivity to changes in implied volatility, representing the amount by which its value will change in response to a change in the expected volatility of the underlying asset. It is expressed as a positive value.

For example, let’s say you own a call option on Company XYZ with a vega of 0.10. If the implied volatility of Company XYZ shares increases by 1%, the value of your call option will increase by approximately $0.10, all other factors being constant. Conversely, if the implied volatility of Company XYZ shares decreases by 1%, the value of your call option will decrease by approximately $0.10. Vega can help traders manage risk and make informed decisions about when to buy or sell options contracts, based on their market expectations and risk tolerance. They may also use options strategies such as buying options with high vega values to take advantage of potential changes in implied volatility.