The Factors that Affect the Value of An Option premium..

 There are 2 types of factors that affect the value of the option premium:

They are Quantifiable Factors and Non Quantifiable Factors..

Quantifiable Factors..

 *    Underlying stock price

 *    The strike price of the option

*     The time to expiration and

*     The volatility of the underlying stock

 *    The risk free interest rate

Non Quantifiable Factors..

 *    Market participants varying estimates of the underlying assets future volatility

 *    Individuals  varying estimates of future performance of the underlying asset, based on fundamental or technical analysis

 *    The effect of supply  and demand- both in the options marketplace and in the market for the underlying asset

 *    The depth of the market for that option - the number of transactions and the contract's trading volume on any given day.

Share: