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Old 17th August 2012, 11:24 AM
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Default Option Pricing - Time Value



If a stock is trading at open price of 2400, current price 2450 (i.e. 50 points up).

A put option in Aug expiry is at Rs 53.

Now, if the stock stays at 2450 for the entire week, the option price above will rise / fall?

Thanks.
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Old 17th August 2012, 01:56 PM
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Originally Posted by ijay View Post
Now, if the stock stays at 2450 for the entire week, the option price above will rise / fall?
Usually price falls in such cases, but nothing can be said with certainty because prices are always decided by opinions of buyers and sellers.

Options that are closer to expiry lose "time value" faster compared to options that are far from expiry.
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