In this chapter, we will talk about another crucial Option Greek called Theta. We will start our discussion by introducing Theta and then talking about its other important details. We shall see why Theta is a friend to an option... (More)

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# SoS Module - OptionsIn this module, we will talk in detail about a very versatile derivative instrument called options. We will start right from the basic terminologies, such as defining what an option is, type of options, option moneyness and price etc. Once the basics are clear, we shall then proceed to more complex matters, such as Option Greeks and Strategies. The objective of this module is to familiarise the reader with the intricacies of options, so that one can understand how to successfully use these versatile instruments.

In this module, we will talk in detail about a very versatile derivative instrument called options. We will start right from the basic terminologies, such as defining what an option is, type of options, option moneyness and price etc. Once the basics are clear, we shall then proceed to more complex matters, such as Option Greeks and Strategies. The objective of this module is to familiarise the reader with the intricacies of options, so that one can understand how to successfully use these versatile instruments.

In this chapter, we shall study some crucial concepts that pertain to options. These include the two elements of option price (intrinsic value and time value) and moneyness of an Option. We will also cover how to calculate the breakeven... (More)

Hi Ashish, the price of an option comprises of two components: intrinsic value and extrinsic value (aka time value). Time decay affects the extrinsic value of an option. The greater the time to time expiration, the greater would be the... (More)

Time Decay leads to a steady fall in option prices, but the rate of it depends on various factors (whether the option is in the money or out of the money, time left for expiration etc) , it is an... (More)