Premium of a put option as it approaches expiration versus


Conversely, a put option loses its value as the underlying stock increases and the time to expiration approaches. Only in-the-money options have intrinsic value. It represents the difference pjt the current price of the underThe price paid premoum acquire the option. Also known simply as option price. Not to be confused with thestrike price. Market price, volatility and time remaining are the premum 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.




Premium of a put option as it approaches expiration versus

Put option expiration of approaches it premium as versus a