Premium of a put option as it approaches expiration witch


Premium of a put option as it approaches expiration witch


For the employee incentive, see Employee stock option. The strike price may be set by reference to the spot price (market price) of the underlying security or commodity on the day an option is taken out, or it may be fixed at a discount or at a premium. One reason serious investors love options is that they can be used for so many different strategies.Think a stock is going to rise. Want some protection should your stock unexpectedly plummet. Acquiring a put option gives you the ability to sleep easy, knowing you can sell it later at a pre-determined price and limit your losses.

The number of possible strategies goes on and on.Options can open the door premium of a put option as it approaches expiration witch big gains or provide a safeguard against possible losses. An option premium may also refer to the current price of any specific option contract that has yet to expire. Also known simply as option price. Not to be confused with thestrike price. Market price, volatility and time remaining are the primary forces determining the premium. There are two components to the options premium and they are intrinsic value and time value.

Intrinsic ValueThe intrinsic value is determined by the difference between the current trading price and the strike price. Only in-the-money optionshave intrinsic value. Intrinsic value can be computed for in-the-money options by taking the difference between the strike price and the current trading price. Out-of-the-money options have no intrinsic value. The value and pricing of stocks is fairly simple for most investors to understand.

Only in-the-money options have intrinsic value. It represents the difference between the current price of the under.




Premium of a put option as it approaches expiration witch

It of as premium witch put option a expiration approaches

Premium of a put option as it approaches expiration witch



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