Why didnt this option move today?

Y

yarray

Question on the apple june 210 option


The option had 10,297 volume today, and aapl closed at +4. It was up to +5 intraday.


Can someone explain to me why the option kept retracing back to its lows as soon as appl atock started to sell off a little bit. The stock itself was in an uptrend all day.

Does it just come down to people placing lower asks? or is it something else?

Thanks.
 

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Option prices are affected by price movement AND implied volatility.

So, if the market moved and no change in price.... volty.

Also the market can stand still, and the option price changes.... volty.
 
Volatility and theta decay. Like the last poster said, stock goes higher, volatility drops, and option values decrease. Also, since there are only 10 days until june expiration, you effectively lost 10% of your option's value to theta decay.
 
Quote from 50_Bip:

Volatility and theta decay. Like the last poster said, stock goes higher, volatility drops, and option values decrease. Also, since there are only 10 days until june expiration, you effectively lost 10% of your option's value to theta decay.
More...

Bingo!
 
yarray,

Option pricing is calculated using the Black-Scholes method which takes into account several different factors including the current share price, strike price, implied volatility, days to expiration and risk free interest rate.

That being said I put in all the variables for you into an excel sheet which will calculate the option price for you. You can use it other options if you want, it works pretty well.

Hope this helps!
 

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