Inefficient Market Hypotheses

  Options Pricing Option premiums and the subsequent movement of option prices are determined through a pricing model such as Black-Scholes. Standard inputs of an options pricing model are: Underlying Asset Price As detailed above, the relationship between the strike price and the underlying asset price will have a strong influence on the price of an option. For a call option, the higher the underlying asset price, the higher the option premium. The payout at exercise of the option is the difference between the underlying asset price and the strike price. Call options with an underlying asset price below the strike are "out of the money", at the strike are "at the money", and above the strike are "in the money". For a put option, the lower the underlying asset price, the higher the option premium. The payout at exercise of the option is the difference between the strike price and the underlying asset price. Put options with an underlying asset price above ...