Factors Determining Value of an Option

[abhishreshthaa]

a. Maturity of an option: higher the price higher the value of an option and vice a versa


b. Spot price of underlying assets:


c. Strike price of underlying assets:


d. Interest rate structure in the market: higher the interest rate structure in the market higher the value of an option and vice a versa


e. Volatility: higher the volatility in the market higher the value of an option and vice a versa.


This is so because higher the volatility in the market, higher the potential for earning more, thus the buyer of an option has to pay more premium.

 

[rosemarry2]

a. Maturity of an option: higher the price higher the value of an option and vice a versa


b. Spot price of underlying assets:


c. Strike price of underlying assets:


d. Interest rate structure in the market: higher the interest rate structure in the market higher the value of an option and vice a versa


e. Volatility: higher the volatility in the market higher the value of an option and vice a versa.


This is so because higher the volatility in the market, higher the potential for earning more, thus the buyer of an option has to pay more premium.

hi abhi,

Please check attachment for Factors Affecting Option Premium Values, so please download and check it.