Chp. 15 - Option Pricing

Chp. 15 - Option Pricing - Option Pricing Factors affecting...

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Option Pricing
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Factors affecting Option Pricing
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Factors affecting Option Pricing Current Stock Price S 0 Exercise Price X Time to Expiration T Volatility of Stock Prices σ The Risk Free Interest Rate r f Dividends Expected During Life of Option
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Current Stock Price S 0 What effect would changes in stock price have on the price of Put and Call Options, holding all else constant? Stock Price Price of Call Price of Put Up Down
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Current Stock Price S 0 What effect would changes in stock price have on the price of Put and Call Options, holding all else constant? Stock Price Price of Call Price of Put Up Up Down Down Down Up
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Exercise (Strike) Price X What effect would changes in the exercise price have on the price of Put and Call Options, holding all else constant? X Price of Call Price of Put Up Down
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Exercise (Strike) Price X What effect would changes in the exercise price have on the price of Put and Call Options, holding all else constant? X Price of Call Price of Put Up Down Up Down Up Down
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Time to Expiration T What effect would changes in time to expiration have on the price of Put and Call Options, holding all else constant? T Price of Call Price of Put Increase Decrease
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T What effect would changes in time to expiration have on the price of Put and Call Options, holding all else constant? T
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This note was uploaded on 01/12/2010 for the course FIN FIN 360 taught by Professor Shimmin during the Fall '09 term at University of Dayton.

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Chp. 15 - Option Pricing - Option Pricing Factors affecting...

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