Understanding Options Pricing | Fidelity Investments

Check out our video to learn what an options premium is, and 3 key factors that can affect that premium such as underlying price, expiration and implied volatility. Learn about options premium and 3 key factors that can affect it -underlying price, expiration, and implied volatility.

00:00 Welcome
00:38 What is an options premium
01:22 Intrinsic value and premium
03:10 Time to expiration and premium
03:59 Implied volatility and premium
05:23 That’s a wrap

Questions? Drop them below 👇 and we’ll reply right in the comments.

_Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk. Supporting documentation for any claims, if applicable, will be furnished upon request._

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[yann]

Hi Mrs Viktorin, Thank you for the explanatory video.

What you said is very clear but I am still curious about something. Since all those factors (intrinsic and extrinsic) affect the price of options in the same way (calls and puts). Why is there sometimes a skew towards the price of puts options (Most of the time, they are more expensive than calls) ? Is there anything else taken into account while pricing ?

Thank you for your answer.

[harrisjohnson]

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