9679927
Description
Flashcards by Mitul Patel, updated more than 1 year ago
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Created by Mitul Patel
over 8 years ago
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| Question | Answer |
| (6) Factors Affecting Option Prices |
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| Effect on Option Price of Variable Changes (European and American) |
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| Effect of Stock Price on Option Price |
*Calls become more valuable as S increases
*Puts become more less valuable as S increases
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| Effect of Strike Price on Option Price |
*Calls become less valuable as K increases
*Puts become more valuable as K increases
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| Effect of TTE on Option Price |
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| Effect of Volatility on Option Prices |
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| Effect of RF Rate on Option Prices |
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| Effect of Future Dividends | * Reduce the stock price on ex-dividend date *Decreases value of calls/increases value of puts |
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