Stock Price =
Strike Price =
Risk-Free Rate =
Price Date = 0/0/0
Expiration Date = 0/0/0
Call Price = 0
Put Price =
Popular method for calculating option prices.
- Stock Price: Current stock price.
- Strike Price: Option strike price.
- Risk-Free Rate: Risk-free interest rate expressed as a percentage.
- Volatility: Annual volatility percentage of the stock price, average movement of the stock per day over the previous year, always expressed in absolute terms (-10% would be 10% movement).
- Price Date: Date of the theoretical call or put.
- Expiration Date: Date the options will expire.
- Call Price: Theoretical option call price as of the price date, if the expire and price dates are the same, the call price would be the difference between the stock and strike prices.
- Put Price: Theoretical option put price as of the price date.
You own options in a company that have a strike price of $13/option. The current stock price is $8 as of March 23, 2008. Your options expire on August 3, 2009. If Government T-Bills are trading at 4% interest and the stock's volatility is 20%, what's the put price on the options?
- Stock Price: 8.00
- Strike Price: 13.00
- Risk-Free Rate: 4.0%
- Volatility: 20.0%
- Price Date: March 23, 2008
- Expiration Date: August 3, 2009
The puts are worth $4.34.