Option Price Behavior - optionseducation.org

Normally, if the stock price goes up and the other factors remain the same, then a call option goes higher. Therefore, if the call option has gone down, then one of the other factors must have changed. The passage of time can certainly push an option's value lower. A dividend payment …

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Spot Goes Down, Premium Goes Up, Price Stays The Same?

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31 votes, 25 comments. With spot going through the floor today, I made a big purchase at $14.73. I noticed however, prices only improved a little…

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Whats The Idea Behind Puts That Are Above The Current Stock Price?

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The contract for a put allows you to sell at stock price...so if you have a $30 put and the stock goes down to $20, you could theoretically buy 100 shares at $20 and sell them for $30. The …

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Spot Price Dropping But Premiums Are Still High? : R/Silverbugs

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Silver premiums are just ridiculous to me. The more the premium, the more you're in the hole when you buy, meaning spot needs to go up 20% or more for you to just break even! The …

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FAQs about Option Price Behavior - optionseducation.org Coupon?

What happens if a call option goes down?

What happens if a stock price goes up?

You may lose what you paid as a premium if the stock price stays the same or goes up. You risk large losses when selling put options. The major difference between call and put options is that the former allows holders to "call" or purchase the underlying asset, while the latter lets the holder "put" or sell that asset. ...

Why do call option premiums rise when interest rates rise?

In general, call option premiums rise when interest rates rise. That is because options are priced on a risk-neutral basis (i.e., on a Delta-neutral or fully-hedged basis). Therefore, a long call is hedged with short stock, and a short stock position generates interest revenue. That makes the call option worth more. ...

What happens if the stock goes down 8 points?

If the stock price decreases by 8 points, it is currently $11 short of the put's strike price. However, since there is time until October, there is a chance for the stock price to decrease further, reaching the put's strike price and going into the money. ...

What happens if a put option price is less than strike price?

When the market price of a put option's underlying asset is less than the strike price, the put option is described as being in the money. Alternatively, you can sell put options, which comes with risks of its own but will generate premium income. ...

What is the concept behind options pricing?

Options pricing is based on the gap between the strike price and the current market price, and volatility. That's why the VIX, a commonly accepted volatility index, is actually just a weighted blend of S&P 500 future options prices. ...