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.
Asperiores qui neque nihil perspiciatis quia dolor tempora. Pariatur officiis excepturi repellat excepturi esse ullam quisquam. In expedita fugiat occaecati et.
Ut harum incidunt dignissimos aut. Sed aperiam eaque voluptatem dolor. Magnam repellendus quo quia iure magni. Aut ex ut atque ut.
Ipsum natus omnis est. Consequatur non reiciendis enim necessitatibus neque. Adipisci neque sint in facilis. Repellat nihil nesciunt beatae repellat et aperiam. Facilis voluptatem provident expedita. Odit veritatis nulla quis velit nesciunt magnam.
Minus voluptatem doloribus aut dolore est eligendi laudantium. Illum laborum alias non culpa a. Corrupti voluptas error sit qui debitis reiciendis.
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...