How Are Options Priced and What is Short Volatility?
Broken Pie Chart · Broken Pie Chart
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Show Notes
See what factors determine how an option is priced. Whether on a stock index or underlying stock, time, implied volatility, interest rates, dividends, and distance in or out of the money all play a role. Known as the Black-Scholes model, Derek breaks down the inputs and which ones are more significant not only to option premium levels but also changes in price.
Explaining the option greeks Delta, Gamma, Theta, Vega, Rho
What is implied volatility and why is it so important in options pricing?
How do option premiums decay towards expiration day?
What determines whether an option is in or out of the money?
How to convert a stock's implied volatility percentage to expected multiple standard deviation ranges?
What does is mean to sell option volatility premium for income?
Mentioned in this Episode:
What the options market tells us about stock moves around earnings releases
https://razorwealth.com/what-the-options-market-tells-us-about-expected-stock-moves-around-earnings/
Razor Wealth Management www.razorwealth.com
Derek Moore's book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547