Chapter 05 · Section 5.1
Relationship between the premium and the price
What is the relationship between the premium and the price of the underlying?
b) There are many factors which influence the change in the premium relative to the price of the underlying.
Yes. The other important factors are: time remaining to expiration, volatility, and the amount by which the option is in-the-money.Continue
a) The premium of the option will move up or down by the same amount as the price of the underlying.
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