Option Value

rcaponeg

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I am just learning about options and have a question? If I buy an option at the money with a 3 month expiration date and it costs say 1500.00 a week later is it still worth about 1500.00 minus time decay. Thank you Bob
 
I am just learning about options and have a question? If I buy an option at the money with a 3 month expiration date and it costs say 1500.00 a week later is it still worth about 1500.00 minus time decay. Thank you Bob

you should find some option pricing spreadsheet and plug in values.
run them as an example, it drops to about 1440 with same IV
 
I am just learning about options and have a question? If I buy an option at the money with a 3 month expiration date and it costs say 1500.00 a week later is it still worth about 1500.00 minus time decay. Thank you Bob

Assuming the underlying remains the same price and your option is still ATM a week later, then the options increase volatility would help to premium to remains the same even with a bit of time-decay effect. However if the underlying moves above the strike price and your long option is ITM, then what you experience could be a volatility 'crush' when the option premium gets cheaper even though your underlying moves in your favor. This is the fallacy that most option buyers faced when buying options when the implied volatility is high.
 
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