Cole Turner
How to Value an Option?
The value of an option, also known as the option premium, is the price paid by the buyer to the seller for the option contract. Whether an investor is buying or selling options, understanding the three factors that make up the value of an option are crucial in succeeding in options trading; these three factors […]
What is the Black-Scholes Model and Formula – Why it Matters in Options Trading
The Black Scholes model, or Black Scholes formula, is the world’s most well-known pricing model for options. The Black Scholes pricing model is important because anyone can use it to assess the value of an option. This article will explain the basics of the Black Scholes model and why it is important to understand. This […]
The Basics of Option Pricing – How to Understand It
The price a buyer pays for an option contract is called the option premium. This article will explain the three things that make up the pricing of an option: intrinsic value, time value and implied volatility. It is important to understand what these three things are in order to differentiate between a good and a […]
The Difference Between Buying and Selling Put Options
Put options are a contract between a buyer, known as the holder, and a seller, known as the writer. An investor can profit from both buying and selling put options, but there is risk involved. This article should provide investors with the understanding needed to manage that risk and profit from buying and selling put […]
Option Premium – Everything You Need to Know
An option premium is the price paid by the buyer to the seller for an option contract. Premiums are quoted on a per-share basis because most option contracts represent 100 shares of the underlying stock. Thus, a premium that is quoted as $0.10 means that the option contract will cost $10. Whether an investor wants […]
Expiration Date – Options Trading
The expiration date of an options contract is the last day at which the buyer may exercise his right on the option. Once the options contract passes its expiration date, the option expires and becomes worthless. For example, call options give the owner of the option the right, but not the obligation, to buy an […]