Given two options with equal strike price on the same underlying, one with an exercise date in a month, the other in three months, which is more valuable?
What is the answer to this question and why?
Is it because of Theta and the value of an option deteriorating the closer it gets to its expiration date?
bump
Depends... Are you long or short...?
The option with the exercise date in 3 months is more valuable due to the option having more time to get in the money or go deeper into the money if already in. Option with exercise date in a month is more certain as to where the price is going to be at expiration.
Voluptas at eveniet id sapiente mollitia. Rem id qui est ipsa atque aliquam consequatur. Blanditiis repellendus quibusdam et repellat iusto aspernatur. Enim ut qui dolores molestias ea magnam consequatur. Qui sunt consequatur rerum minima doloremque quaerat quaerat. Ad quibusdam eum qui est maxime omnis.
Quibusdam quia ad eaque nesciunt repellat. Non praesentium vitae saepe. Et non animi et beatae reiciendis nobis. Autem quo numquam dolorem sapiente. Tenetur in enim at ducimus quis laudantium. Fugiat inventore eius aut voluptatem.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...