Option time value

Zero- value option. Can Volatility Be Zero? - Macroption

Glossary Short answer: No.

It is positive for in the money options. It is zero for out of the money options.

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Intrinsic Value Calculation Intrinsic value of an option is the value one would gain from exercising the option immediately. It is different for calls and puts.

A zero cost collar is a form of options collar strategy to protect a trader's losses by purchasing call and put options that cancel each other out. The downside of this strategy is that profits are capped, if the underlying asset's price increases. A zero cost collar strategy involves the outlay of money on one half of the strategy offsetting the cost incurred by the other half. It is a protective options strategy that is implemented after a long position in a stock that has experienced substantial gains. The investor buys a protective put and sells a covered call.

It is that you hold the zero- value option until expiration and it expires worthless, making you lose the entire initial investment the option premium paid. Will you exercise the option?

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Fortunately, options give you the right, but not the obligation to exercise. Generally, you will only choose to exercise when doing so would be profitable for you.

Но как она была создана. Откуда взялись эти странные видения, так явственно представившиеся. -- Проблема оказалась не совсем обычной,-- прозвучал тихий голос Центрального Компьютера. -- Я предположил, что у вашего робота должна быть какая-то зрительная концепция Великих. Если бы я смог убедить его, что чувственные представления, получаемые им, совпадают с этими зрительными образами, остальное было бы уже .

Therefore you choose to not exercise the option and just let it expire. An option always gives you two alternatives: to exercise or not to exercise.

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For calls it is underlying price minus strike price underlying price minus 20 in our example. For puts it is strike price minus underlying price.

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The outcome of not exercising is always zero. Do nothing — gain nothing — lose nothing. It makes sense to always choose the better of the two outcomes, which is never worse than zero.

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