Chapter 02 · Section 2.1
Option premiums - Q1
Option premiums are determined
b) by pricing models.
No. Pricing models do not determine actual exchange-traded option premiums. However, they do provide theoretical premium values and are used by many market participants to aid decision-making.
c) by open competition in the market.
d) by direct negotiation between holders and writers.
a) by the exchanges.
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