Wiley Thương mại loạt các tính năng sách của các thương nhân đã sống sót của thị trường bao giờ thay đổi tính khí và thịnh vượng, một số hệ thống tái phát minh, những người khác bằng cách quay trở lại vấn đề cơ bản | 44 THE OPTIONS COURSE the call option on shares of International Business Machines IBM that expires in June and has a strike price of 50. The QQQ October 30 Put is the put option contract on the Nasdaq 100 QQQ that expires in October and has a strike price of 30. DETERMINANTS OF OPTION PRICES Options are sometimes called wasting assets because they lose value as time passes. This makes sense because all else being equal an option to buy or sell a stock that is valid for the next six months would be worth more than the same option that has only one month left until expiration. You have the right to exercise that option for five months longer However time is not the most important factor that will determine the value of an options contract. The price of the underlying security is the most important factor in determining the value of an option. This is often the first thing new options traders learn. For example they might buy calls on XYZ stock because they expect XYZ to move higher. In order to really understand how option prices work however it is important to understand that the value of a contract will be determined largely by the relationship between its strike price and the price of the underlying asset. It is the difference between the strike price and the price of the underlying asset that plays the most important role in determining the value of an option. This relationship is known as moneyness. The terms in-the-money ITM at-the-money ATM and out-of-the-money OTM are used with reference to an option s moneyness. A call option is in-the-money if the strike price of the option is below where the underlying security is trading and out-of-the-money if the strike price is above the price of the underlying security. A put option is in-the-money if the strike price is greater than the price of the underlying security and out-of-the-money if the strike price is below the price of the underlying security. A call or put option is at-the-money or near-the-money if the
