Options: Factors Affecting Option Value
Interactive

Options: Factors Affecting Option Value

Intuition Publishing
Updated Sep 24, 2020

The value of an option is affected by a number of factors, and each of them has to be taken into account when pricing an option, regardless of the pricing model used. We look at the main factors here; the interest rate, the relationship between the strike and the underlying asset price, the time left to maturity of the option, and the volatility of the underlying asset.