Factors affecting option value (for the CFA Level 1 exam)

Factors affecting option value (for the CFA Level 1 exam) discusses the impact of the following factors on the value of call and put options:
value of the underlying,
exercise price,
time to expiration,
the level of interest rates,
underlying volatility,
income and costs related to owning the underlying.
This video explores topics covered in Lesson 8, Learning Module 8 of the Derivatives section of the 2024 CFA Level 1 Curriculum.

[@zedleppelin6466]

Not in CFA but love learning about options trading thank you!

[@yeshwanthreddy5069]

ME TOO

[@alilawati87]

00:35 Value of Underlying 08:25 Exercise Price 12:27 Time to expiration 23:33 Risk Free Rate 26:37 Volatility of the Underlying 30:16 Income or Cost related to owning the Underlying 35:09 Summary

[@vyduong1437]

Hi, could you please explain why in the Practice Problem 9 of the Learning Module 8 of Derivatives that rising interest rate would negatively impact both the options strategy? Appreciate much for all of your hard works. Thank you

[@letmeexplaincfa]

because a rising rate decreases the value of a put and increase the valua of a call. The question talks about a short position in the put and long position in the call. e

[@mostafaemad740]

the upper bound of put option is the exercise price or the present value of the exercise price ? i saw an question refers it is the present value and you mentioned that it is exercise price

[@letmeexplaincfa]

Please watch this video: kzbin.info/www/bejne/nIS6lpuna5KIhc0si=gRKEg_xlZZva4_Bv At 1:09:10 I discuss this specific issue and I say that I don't agree with what is in the Curriculum. I think it should be the present value of the exercise price but the Curriculum says exercise price.

[@mostafaemad740]

Perfect ♥️ If the costs increase the put option value decrease ?

[@letmeexplaincfa]

Yes, that's correct.

[@anshkhakhkhar1256]

Hello sir , Impact of Increase in Time value would have a negative impact on exercise value { without considering time value component } of put option and will have a positive impact on P(t) { value considering both component time value and exercise value } assuming it’s not a deep In the money put option.?