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Eastern Iowa | Is there a way/standard formula for figuring the value of a put or call at different stages of its life. Lets say you buy a $5 Dec 08 corn call for $0.42 at the current board price of $486'6. What if on June 15th the board price for Dec 08 corn is $550'0, is there a way to calculate how much the call would be worth? I understand that there is a time factor in there that accounts for some of the value of the call, but how much? I know that the value of your call doesn't go up penny for penny of what the board does from $486'6 to $500'0. But, what about from $500'0 to $550'0, does the value of your call go up penny for penny once your call is in the money? What if the board price of Dec 08 corn is $550'0 on Sept. 15th, what would your call be worth then?
Thanks for any help guys. | |
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How do you calculate the value of an option?
