Texts: What does it mean to state that the theta of an option position is -150 per day? If a trader feels that neither a stock price nor its implied volatility will change, what type of option position is appropriate?
Added by Albert F.
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A negative theta indicates that the option's value will decrease over time. Show more…
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Suppose you own a call option on Apple stock with a strike price of $150. The option will expire one year from today. Suppose Apple will not pay dividends in the next year. The annual risk-free rate of interest is 3%. The current stock price of Apple is $170 per share. Suppose that the price at which the call option is selling in the market increases from $30.81 to $35 (holding everything else constant). What has happened to the implied volatility of Apple stock? Group of answer choices It has not changed. It has increased. It has decreased. There is insufficient information provided to draw any conclusions.
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