Option Market:- The right but not the obligation in order to buy or sell a futures contract at a designated price.
Premium:- Premium is the amount which is paid by the buyer of an option to an options seller. Options premium is received by the seller of an option. Option Premium is calculated by Time Value and Intrinsic Value. Premium value totally depends on Time Value and Intrinsic Value.
Time value:- In simple words, the time value of an option is directly related to how much time an option has until expiration. As the option nears its expiration date, the time value will edge closer and closer to $0.
Intrinsic Value:- The intrinsic value represent difference between the underlying security's price and the strike price of the contract. Intrinsic value can be defined as the amount by which the strike price of an option is in-the-money.
Premium:- Premium is the amount which is paid by the buyer of an option to an options seller. Options premium is received by the seller of an option. Option Premium is calculated by Time Value and Intrinsic Value. Premium value totally depends on Time Value and Intrinsic Value.
Time value:- In simple words, the time value of an option is directly related to how much time an option has until expiration. As the option nears its expiration date, the time value will edge closer and closer to $0.
Intrinsic Value:- The intrinsic value represent difference between the underlying security's price and the strike price of the contract. Intrinsic value can be defined as the amount by which the strike price of an option is in-the-money.
