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Trading Option Greeks: How Time, Volatility, and Other Pricing Factors Drive Profits Dan Passarelli
Publisher: Wiley

These risks are factors that will affect the price of your option– also known as the greeks. Market conditions will change, don't let fear drive your trading decisions, look forward not backward. Extrinsic time premium to expiration. Say if the IBM share is now trading at $135 then you will have a profit of $10 ($145 - $135) x 100 shares, which is equivalent to $1000. All of these factors You will not be able to afford to squeeze out profits of a dieing position while putting on new positions, such as buying more on the way down. Below is a description of the above table;. If a company is priced for perfection and it fails to meet its earnings growth numbers or guides down, the liquidiation of the stock can be fierce and continue in the direction of that trend for a long time as well. Sep 28, 2011 - By adhering to these option trading principles, you will become a more consistent, confident, and profitable options trader. Sep 24, 2012 - An options price is calculated by a number of different factors including time until expiration, volatility, strike price, the underlying stock price and the risk free interest rate. Let's going to And this can sometimes drive price. Mar 9, 2012 - The premium of $900 will be given to someone on the other side of the trade who already sold the contract. IV future volatility calculated by Black-Scholes Model.