Option Pricing & Premiums
The premium (price of option) is determined by many factors:
Intrinsic Value – Difference between current stock price and strike price. Example: If stock = ₹200, strike = ₹180 (call), intrinsic value = ₹20.
Time Value – Extra premium because of time left until expiry. More time = higher premium.
Volatility – Higher volatility increases premium (uncertainty = higher value).
Interest rates & dividends – Also affect option pricing slightly.
The most famous model for pricing options is the Black-Scholes Model, used worldwide.
Moneyness (ITM, ATM, OTM)
Options are classified as:
In The Money (ITM): Option already has intrinsic value. (Example: Stock = ₹250, Call strike = ₹240).
At The Money (ATM): Stock price = strike price.
Out of The Money (OTM): Option has no intrinsic value yet. (Example: Stock = ₹250, Call strike = ₹280).
OTM options are cheaper, but riskier. ITM options are costlier, but safer.
The premium (price of option) is determined by many factors:
Intrinsic Value – Difference between current stock price and strike price. Example: If stock = ₹200, strike = ₹180 (call), intrinsic value = ₹20.
Time Value – Extra premium because of time left until expiry. More time = higher premium.
Volatility – Higher volatility increases premium (uncertainty = higher value).
Interest rates & dividends – Also affect option pricing slightly.
The most famous model for pricing options is the Black-Scholes Model, used worldwide.
Moneyness (ITM, ATM, OTM)
Options are classified as:
In The Money (ITM): Option already has intrinsic value. (Example: Stock = ₹250, Call strike = ₹240).
At The Money (ATM): Stock price = strike price.
Out of The Money (OTM): Option has no intrinsic value yet. (Example: Stock = ₹250, Call strike = ₹280).
OTM options are cheaper, but riskier. ITM options are costlier, but safer.
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המידע והפרסומים אינם אמורים להיות, ואינם מהווים, עצות פיננסיות, השקעות, מסחר או סוגים אחרים של עצות או המלצות שסופקו או מאושרים על ידי TradingView. קרא עוד בתנאים וההגבלות.
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
פרסומים קשורים
כתב ויתור
המידע והפרסומים אינם אמורים להיות, ואינם מהווים, עצות פיננסיות, השקעות, מסחר או סוגים אחרים של עצות או המלצות שסופקו או מאושרים על ידי TradingView. קרא עוד בתנאים וההגבלות.