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Tag Archives: Black-Scholes Model
Historical volatility of stocks

Factors that Influence Option Value + The Black-Scholes Model

An integral part of understanding option trading basics, is mastering the components that influence option value. Many option traders will look to make money as a result of a discrepancy between an option’s current market value and its theoretical value. In other words, is the option overpriced or undervalued? If, for example, an option is […]

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Implied volatility over different strikes

Volatility Skew- Understanding Option Premiums Over Different Time Frames and Strikes

In covered call writing, our option premiums are influenced by the volatility of the underlying security. Using the Black Scholes option pricing model, we can calculate the volatility of the underlying by entering the market prices for the options. Common sense would seem to dictate that for options with the same expiration date, we expect the implied volatility […]

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Playing the Bid-Ask Spread When Selling Covered Call Options

An integral aspect of our options trade executions is to sell at the “bid” and buy at the “ask”. Many times we can “negotiate” the bid to a higher price or the ask to a lower price. Would you like to earn $50 in 50 seconds? Why not learn how to play the bid-ask spread? […]

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