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E.Central MN | Time value relates the length of time til the option expires. The sooner it expires the less risk of price changes, the longer it runs the greater the probablility that something could occur and you pay for that(like insurance). As the option period gets closer to expiration you lose that insurance value, ie the option decreases in value. This can also be affected by the volatility in the market. If the market is wild and unstable would you charge the same price to insure for price risk or would you ask for a higher amount, the latter. Clear as mud... | |
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Bean puts
