Options Expiration Date And How It Influences The Price

[Kim]

I'm glad to present a guest contributor article from Marcus Holland, the editor of FinancialTrading.com – a new but fast growing education resource on all aspects of financial trading

Introduction

To understand how the expiration date of an option influences the price, one first needs to understand how the price of an option is calculated in the first place. While the standard formula to calculate options prices, the Black-Scholes model, is very complex and requires advanced knowledge of statistics, for most traders it is sufficient to understand the basics involved.

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