Factors Influencing Option Prices
Option prices (premiums) are affected by several variables, collectively analyzed under option pricing models such as the Black-Scholes model. The main factors include:
Underlying Asset Price: Higher prices increase call premiums and decrease put premiums.
Strike Price: The closer the strike price is to the current price, the higher the premium.
Volatility: More volatility means higher premiums due to increased uncertainty.
Time to Expiry: Longer durations mean more time value.
Interest Rates: Higher interest rates slightly increase call premiums.
Dividends: Expected dividends can reduce call premiums and increase put premiums.
Option prices (premiums) are affected by several variables, collectively analyzed under option pricing models such as the Black-Scholes model. The main factors include:
Underlying Asset Price: Higher prices increase call premiums and decrease put premiums.
Strike Price: The closer the strike price is to the current price, the higher the premium.
Volatility: More volatility means higher premiums due to increased uncertainty.
Time to Expiry: Longer durations mean more time value.
Interest Rates: Higher interest rates slightly increase call premiums.
Dividends: Expected dividends can reduce call premiums and increase put premiums.
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Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
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Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Hello Everyone! 👋
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.