A Part in Options Pricing: What Determine Option Premiums?

Time mean money, let me directly tell you what I am going to talk about: What determine option premiums? Learning about options pricing, such the basic knowledge is needed. Back to our answer, you know option premiums are determined the same way futures prices are done; through active competition between buyers and sellers. In other words, they are determined by basic supply and demand fundamentals.
There are two components determining option premiums: Intrinsic value and Time value. We have this:

Intrinsic value + Time value = Premium

In which

• Intrinsic value: is the amount of money that could be currently realized by exercising an option with a given strike price. An option’s intrinsic value will be determined by the relationship of the option strike price to the underlying futures price as below:

Puts: Strike price > Underlying futures price

Calls: Strike price < Underlying futures price

Here, a call option has intrinsic value if its strike price is below the futures price, and a put option has intrinsic value if its strike price is above the futures price. To sum up, an option has intrinsic value if it is currently profitable to exercise the option.

• Time Value: from the above formula, we have:

Total premium
- Intrinsic Value
= Time value

We can understand that if an option does not have intrinsic value, that option’s premium would be all time value. The mathematics of calculating time value shows that we can know time value when we know the total premium and the intrinsic value; however, it isn't easy to understand the factors that affect time value.

Actually, nothing is easy to learn about options pricing is not one-day job. There are plenty of things for us to research. If you also find it interesting and want to know more, Time Means Money will give you a hand.

Is The Premium Collection Program - Time Means Money Right to You?

You may get to understand more about the premium collection program. This premium collection program is for all speculators who are at a point in their lives where they can assume some calculated risk. It is not a get rich quick program. The program will identify trades that have a statistically high probability for success. If you approve, we will enter and exit these trades for you. Participants have to understand that even with probability on their side, there is a calculated risk of loss on each and every trade. Actually most options expire worthless and the logic of harnessing time makes sense to you. Understand that and would you like to learn more about selling options, just feel free to contact with Time Means Money.

Option Pricing Models and Option Pricing Techniques Origins

In the limited word, I would like to introduce you guys where Option Pricing Model and Option Pricing Techniques appeared. Get to know more about the history or origins of these can help trader somehow in their trading.
You know, modern option pricing techniques are often considered as one of the most mathematically complex of all applied areas of finance. Most of the techniques and models employed by today's analysts are rooted in a model developed by Myron Scholes and Fischer Black in 1973. This information examines the evolution of option pricing models leading up to and beyond Black and Scholes' model. The Black and Scholes Option Pricing Model didn't appear overnight. Actually, Fisher Black started out working to create a valuation model for stock warrants. This work involved calculating a derivative to measure how the discount rate of a warrant varies with time and stock price. The result of this calculation held a striking resemblance to a well-known heat transfer equation... There are still many things to know more about the history and origin of option pricing models. I hope from the short brief you will find it interest and want to get to know more at Time Means Money. Also, ever wonder what is an option, the basic definition we need to know when we start trading options, you can learn from there. I hope to see you there.

The Introduction of Premium Collection Program from LaSalle Futures Group

LaSalle Futures Group is headquartered in one of the centers of international futures trading, the Chicago Board of Trade. Our main goal to constantly refine and improve our products and services to better serve our customers. We always try to bring our customers the best trading platforms and service.
Times Means Money is the broker-assisted program which is designed so that the individual investor who can assume a calculated risk of loss can potentially benefit from the same market dynamics that large fund managers use to collect option premiums over the course of time. The Time Means Money program exploits the time decay aspect of option premiums, potentially putting you on the receiving end of the fact that most futures options expire worthless. Join with our premium collection program, you can get option pricing models and free option selling guide to know more about the reason why it's said "in the long run, the seller of options should have a higher return than the buyer" and get necessary knowledge and information for their trading. Though investors should be aware that trading futures and options involves substantial risk of loss and is not suitable for everyone, success is still there to wait for you guys.