Accounting/Finance Question re: Options?
Why are option near very exercise prices and readiness date, are written on stocks next to similar prices, selling for different prices? Do option on one of these 2 stocks provide investors near superior investment opportunity within comparison to the other?
Answers:
Of course, two companies next to same prices, same expiration and exercise prices usually flog for impossible to tell apart price abstractly same price. If nearby is any discrepency it may be singular minute vacillation depending on the supply and constraint of the option. It is unusuall to find such option or stocks. No two stocks have alike price within will be difference and i.e. sufficient to be paid the option prices different.
As a rule of thumb one can divide the price as (Exercise price - todays price) x e^(krf x t) where on earth - is minus, krf is risk free rate and t is time to expirty/360. So this be paid the prices varie for different option assuming everything said above. This is a very hypothetical situation in option and one want not verbs such situation will turn out recurrently. Even if it occur it is by providence and if the prices differ it is due to supply and constraint situations.
It have to do beside the volitility of the stock. A stock next to a superior beta will unanimously command a highly developed remedy premium than a stock next to a low beta. That is the more volitile a stock is the highly developed the preference premium.
Not an accounting question. Is a nouns put somebody through the mill (sort of). The difference is the implied volatility - within other words, how much respectively stock is possible to move. Some stocks bounce around plentifully, up, down. These will hold more expensive option prices commonly. Some are slow and steady - these aren't possible to move much up or down during the selection term and thus the risk isn't potential to be worth much because the prime theory trailing option is to appropriation price movement.
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Answers:
Of course, two companies next to same prices, same expiration and exercise prices usually flog for impossible to tell apart price abstractly same price. If nearby is any discrepency it may be singular minute vacillation depending on the supply and constraint of the option. It is unusuall to find such option or stocks. No two stocks have alike price within will be difference and i.e. sufficient to be paid the option prices different.
As a rule of thumb one can divide the price as (Exercise price - todays price) x e^(krf x t) where on earth - is minus, krf is risk free rate and t is time to expirty/360. So this be paid the prices varie for different option assuming everything said above. This is a very hypothetical situation in option and one want not verbs such situation will turn out recurrently. Even if it occur it is by providence and if the prices differ it is due to supply and constraint situations.
It have to do beside the volitility of the stock. A stock next to a superior beta will unanimously command a highly developed remedy premium than a stock next to a low beta. That is the more volitile a stock is the highly developed the preference premium.
Not an accounting question. Is a nouns put somebody through the mill (sort of). The difference is the implied volatility - within other words, how much respectively stock is possible to move. Some stocks bounce around plentifully, up, down. These will hold more expensive option prices commonly. Some are slow and steady - these aren't possible to move much up or down during the selection term and thus the risk isn't potential to be worth much because the prime theory trailing option is to appropriation price movement.