Options query: What will be the premium if...?
Let's speak that I buy a QQQQ Jan 40 Put (a) 0.04.
QQQQ is currently at 48.87, so this put opportunity is out of the money and is really expected to expire worthless.
BUT permit's envision that the stock flea market would crash and QQQQ would step down to 40.00 by the time of expiration.
If this resort would be at the money on expiration hours of daylight, later what would be the premium for this way out on expiration daylight?
(Right immediately, the put option's bid price is 0.02, and the ask price is 0.04.)
Answers:
The final significance of the route is the difference between the price of the stock and the strike price of the option-- so if QQQQ drops to $38 its worth $2/share ($40-$38). If this number is nought or denial (ie if QQQQ is worth $40 or more) the leeway expires worthless.
If you're asking in the order of the price fast beforehand expiration (ie the friday since the saturday when the odds properly expired) next its impossible to say aloud minus knowing the price of the stock. In nonspecific the substitute will get remarkably little speculative appeal straight away in the past expiring, unless it is trading right at the strike price.
An resort AT the money on the expiration date is worthless. The chance does not allow you to supply at a greater price than the marketplace, so the intrinsic appeal is zilch. Only when the flea market price is below the strike price on a put is it IN the money and consequently have intrinsic expediency.
At the expire of expiration time, a ITM picking is worth the strike price smaller quantity the marketplace price for a put or or the open market price smaller quantity the strike price for a give the name.
eg. Strike 40, bazaar 37.50 = 40-37.50=2.50 for a put.
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QQQQ is currently at 48.87, so this put opportunity is out of the money and is really expected to expire worthless.
BUT permit's envision that the stock flea market would crash and QQQQ would step down to 40.00 by the time of expiration.
If this resort would be at the money on expiration hours of daylight, later what would be the premium for this way out on expiration daylight?
(Right immediately, the put option's bid price is 0.02, and the ask price is 0.04.)
Answers:
The final significance of the route is the difference between the price of the stock and the strike price of the option-- so if QQQQ drops to $38 its worth $2/share ($40-$38). If this number is nought or denial (ie if QQQQ is worth $40 or more) the leeway expires worthless.
If you're asking in the order of the price fast beforehand expiration (ie the friday since the saturday when the odds properly expired) next its impossible to say aloud minus knowing the price of the stock. In nonspecific the substitute will get remarkably little speculative appeal straight away in the past expiring, unless it is trading right at the strike price.
An resort AT the money on the expiration date is worthless. The chance does not allow you to supply at a greater price than the marketplace, so the intrinsic appeal is zilch. Only when the flea market price is below the strike price on a put is it IN the money and consequently have intrinsic expediency.
At the expire of expiration time, a ITM picking is worth the strike price smaller quantity the marketplace price for a put or or the open market price smaller quantity the strike price for a give the name.
eg. Strike 40, bazaar 37.50 = 40-37.50=2.50 for a put.