Option pricing is based on the probability of an option will have value at maturity. The main key of the option value is:
- Compare the strike price with the current market price. If the same, diekspektasikan option has a chance to 50% diexercise, because there are equal chances whether the exchange rate or an increase on the due date
- Term time. The longer the period the higher the premium because the longer time required by the option to have value. The longer period of time → higher risk
- Market price volatility. The more volatile the market price of the higher premium.
Strike price and option period chosen by the buyer. Volatility is a statistical calculation can be obtained from the historical price movements. Since the history data is not always a good predictor for the future, the expected volatility using market rates. Bervaraisi depending Volatilitias maturity and described as a curve with the same period as the yield curve.
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Option contract is a very good way to invest. As here risk is less and loss in case is the premium amount being paid at the time of beginning of contract. To earn best returns always use highly accurate stock futures tips while trading.
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