How does the time value of call option formula affect the pricing of cryptocurrency options?

1 answers

• Mehak NiyazAug 03, 2024 · a year ago
  When it comes to the pricing of cryptocurrency options, the time value of the call option formula is a key factor. The time value represents the amount of time remaining until expiration and plays a significant role in determining the option's price. As the time remaining until expiration decreases, the time value diminishes, resulting in a lower option price. Conversely, as the time remaining until expiration increases, the time value increases, leading to a higher option price. This relationship is due to the fact that the longer the time remaining, the greater the probability of the underlying cryptocurrency reaching the strike price. Therefore, understanding the impact of the time value of the call option formula is crucial for pricing cryptocurrency options.
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