Share Option Valuation

Share options provide the right (but not the obligation) to buy (call option) or sell (put option) an underlying asset (shares) within a certain period of time (American option) or at a certain period of time (European option). Valuing share options is complex and requires assumptions on; volatility of the share price, risk free rate, dividend payment %, time to exercise, current market share price and exercise price. Below is a useful option price calculator kindly provided by http://www.intrepid.com. The program was written by Dr Robert Lum. (Note: hit enter to calculate  - the number of calculations you can run on this program is limited and the program will block for a short while after reaching that limit):






























Changes in market conditions would directly effect the price of the share options as an example a markets have been shifting downwards in the current climates which may mean higher volatility – this would lead to a higher option price.