Volatility xpert value of put option


You might have had success beating the market by trading stocks using a disciplined process that anticipates a nice move either up or down. Many traders have also gained the confidence to make money in the stock market by identifying one or two good stocks that may make a big move soon. Most options traders - from beginner to expert - are familiar with the Black-Scholes model of option pricing developed by Fisher Volatility value of put option xpert and Myron Scholes in 1973.

To calculate what is deemed a fair market value for any option, the model incorporates a number of variables, which include time to expiration, historical volatility and strike price. Many option traders, however, rarely assess the market value of an option before establishing a position. (For background reading, see Understanding Option Pricing.)This has always been a curious phenomenon, because these same traders would hardly approach buying a home or a car without looking at the fair market price of these assets.

Often option prices seem to have a life of their own even when markets move as anticipated. A closer look, however, reveals that a change in implied volatility is usually the culprit.TUTORIAL: Options BasicsWhile knowing the effect volatility has on option price behavior can help cushion against losses, it can also add a nice bonus to trades that are winning. Only in-the-money options have intrinsic value.

It represents the difference between the current price of the under.




Volatility xpert value of put option

Volatility value of put option xpert