Why did DUST calls fall despite the price increase of DUST?

A

arden123456

Can someone explain to a beginner why DUST calls fell in price today even though the ticker moved significantly upward? Would a much higher volatility, and accompanying price in call prices on on Fri, followed by a drop in Volatility today be the explanation?

How can one determine if an option is overpriced and likely to fall back in price as DUST calls did today?

http://finance.yahoo.com/quote/DUST/options?p=DUST
 
Having traded DUST options, these options are known to be volatile. But to answer your question, time decay is a major factor, and a logical explanation. Also, if the market continues down, gold will likely go up, which is also a major factor. But if you're looking at this Friday's expiration, it's probably more time decay.
 
Time decay, as mentioned, and a drop in volatility (just guessing as I have not looked at those specific options)...

arden123456 said:
Can someone explain to a beginner why DUST calls fell in price today even though the ticker moved significantly upward? Would a much higher volatility, and accompanying price in call prices on on Fri, followed by a drop in Volatility today be the explanation?

How can one determine if an option is overpriced and likely to fall back in price as DUST calls did today?

http://finance.yahoo.com/quote/DUST/options?p=DUST
More...
 
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