Stock Options Pricing

How are stock options really priced? Knowing and understanding how options are priced and be the difference between you making money or losing your shirt.

One of the biggest misconceptions about options is that they are 100% related to the stock's price.

This is not true, it is possible to buy a call option on a stock, the stock's price goes up and the options price goes down.

That is because there are 2 different parts of an option. The first is called intrinsic value. This is simply the difference between the stock's price and the options price. So if we buy a $90 call on a stock that is trading at $98 the intrinsic value is $8.

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