call me stupid

T

thigle

i have not understood how options are priced.

specifically i dont know how to calculate how much will my puts possibly cost when price reaches such and such price in such and such time.

therefore i dont know how to set profit targets !!!

for ex. i am long 10 x march sp500 puts strike 1400.

i think we revisit august lows soon,
but i dont know
how much will the option price be
when sp500 will be for ex. at 1900.

please help, i want to understand this,
but i didnt manage on my own.

thanx for any help.
 
for ex. the aforementioned puts were 2.00 each
but now we moved 50 points down since then on sp500
and they cost 2.95 thats almost 50%

i know how the time value decays,
but i dont know how will the price be
when sp500 hits 1600 in lets say january or february.
the price of contract might be what 10, 20 50 bucks ?

i have no idea...
 
thank you, i found such calculators before, but those assumptions are my question.
in the calculator in fintools, these guesses are IV, DIV, IR:

for ex. for SPX, what is implied volatility ? can i take VIX as a proxy value ?

and dividend ? sp500 pays dividend ? cant find it anywhere :(

and interest rate in this case ? is this the rate that FED just raised ?

i am confused.
 
Interest rates are not a big deal. Plug in the fed funds rate. The Vol will be a big deal. I can't guess for you.
 
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