Chapter 02 · Section 2.1

Option premiums - Q1

Option premiums are determined

• a) by the exchanges.
  No. The exchange determines the contract specifications (contract sizes, expiration dates, exercise prices) of all options traded on its floor, but not their prices!
  b) by pricing models.
  c) by open competition in the market.
  d) by direct negotiation between holders and writers.

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