Part 10 Trade Like Institutions

How Option Prices Move

Option prices depend on multiple factors:

1. Movement of the underlying asset

Call option goes up when price rises.

Put option goes up when price falls.

2. Time Decay (Theta)

Options lose value as expiry gets closer.
This is good for sellers, bad for buyers.

3. Volatility (VIX)

Higher volatility increases option premiums.
During events (budget, news), premiums rise sharply.