Options pricing and volatility
This is called the Time value. As stated by Brian Byrne, the implied volatility of an option is a more useful measure of the option's relative value than its price. Options finance Mathematical finance.
Retrieved from " https: However, the above view ignores the fact that the values of implied volatilities depend on the model used to calculate them: In general, options based on the same underlying but with different strike values and expiration times will options pricing and volatility different implied volatilities. The reason is that the underlying needed to hedge the call option can be sold for a higher price.
Retrieved 9 June From Wikipedia, the free encyclopedia. Retrieved from " https: The longer the length of time until the expiry of the contract, the greater the time value. In general, it is not possible to give a closed form formula for implied volatility in terms of call price.
Energy derivative Freight derivative Inflation derivative Property derivative Weather derivative. From Wikipedia, the free encyclopedia. These factors affect the premium of the option with varying intensity.