Nifty 50
Sensex
US Tech 100
Dow Jones
FTSE
Dax
CAC
Nikkei 225
Hang Seng
SSE Composite
TAIEX
KOSPI
Gift Nifty
Strategy Indices
Broad Market Indices
Sectoral Indices
Thematic Indices
Home
Finance GlossaryGamma
Gamma
Definition of Gamma
Gamma is a mathematical formula used to measure the change in the delta of an options contract price.
Delta is the change in the price of an options contract in relation to the underlying asset’s price.
In simple terms, gamma can be called as the change of the change. The formula to calculate gamma of an options contract is: Γ = ∂2V/∂S2
Delta is the change in the price of an options contract in relation to the underlying asset’s price.
In simple terms, gamma can be called as the change of the change. The formula to calculate gamma of an options contract is: Γ = ∂2V/∂S2
Related Terms
Comparable Company Analysis
Comparable Company Analysis (CCA) is a method used to evaluate a company’s value by comparing its essential metrics like EBIT, EBITA, and more with other companies.
The underlying assumption of CCA or “Comps” is that publicly traded companies from the same sector or industry will have similar metrics that are comparable.
The underlying assumption of CCA or “Comps” is that publicly traded companies from the same sector or industry will have similar metrics that are comparable.
Quick Ratio
The Quick Ratio, also known as the acid-test ratio, measures a company’s ability to meet short-term liabilities using its most liquid assets. It is calculated as (Current Assets - Inventory) divided by Current Liabilities, excluding less liquid inventory from current assets. A Quick Ratio above 1 indicates a company's strong liquidity to cover obligations without selling inventory, helping investors evaluate financial stability and short-term solvency.
Mutual Fund Sahi Hai
Mutual Fund Sahi Hai is a popular investor awareness slogan/website launched by the Association of Mutual Funds in India (AMFI). It aims to educate people about mutual funds and encourage informed, long-term investing by highlighting the benefits of diversification, professional management, and disciplined investment habits.
P/E Ratio (Forward)
The Forward Price to Earnings (Forward P/E) Ratio is a valuation metric that compares the current stock price of a company to its estimated earnings per share (EPS) for the next four quarters or the next fiscal year. The formula is: Forward P/E = Current Share Price/ Estimated Future EPS. Indian analysts and investors often use the Forward P/E to forecast how expensive a stock is, given what the company is expected to earn in the future, which gives a more relevant picture for making investment decisions than historical earnings.
Book To Bill Ratio
Book to Bill ratio is the value you get by dividing the total worth of new orders received by the total worth of orders sold. The formula to calculate Book to Bill ratio is:
Book to Bill ratio: Total worth of new orders received / Total worth of orders billed
Book to Bill ratio helps companies understand the demand and supply for their goods or services. A Book to Bill ratio of more than 1 means that there’s more demand and less supply.
Whereas, a Book to Bill ratio of less than 1 means that there’s less demand and more supply. Using these indicators, the company can work on increasing or limiting production.
Book to Bill ratio: Total worth of new orders received / Total worth of orders billed
Book to Bill ratio helps companies understand the demand and supply for their goods or services. A Book to Bill ratio of more than 1 means that there’s more demand and less supply.
Whereas, a Book to Bill ratio of less than 1 means that there’s less demand and more supply. Using these indicators, the company can work on increasing or limiting production.
Best Efforts Underwriting/Offering
A best efforts underwriting or offering means the underwriter will do their best to market the securities for the issuer (company, supplier, etc) to investors. The underwriter will not buy all the securities from the issuer, only those the underwriter’s clients want to purchase.
Invest & Trade with a Trading
Platform That's #MadeForTrade
Open your Dhan Account in minutes!
