In Options Trading, buyers pay Premium, which is the price of the option they wish to control. Now, this options price is determined by many variables that impact the profitability of the options contract. Therefore, the options traders need to understand these variables to make the right market decisions. In this article, we will understand the basics of how options are priced and the various factors that affect this pricing. If you wish to learn more about Options Trading, join Universal Investment Strategies, the best way to learn stock trading . learn stock trading Basics of Option Prices Options contracts allow the buyers to buy or sell an underlying security at a pre-determined price, called the Strike Price. The Strike Price is a fixed value, but simply having a lower or higher strike price will not yield profit. To gain profit, the price of the underlying security should move in such a manner that it also covers the Premium. Given below are the two main factors that...
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