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Normal Price of Option


An estimated price of option based on the premise that the relationships between the underlying price and the option price observed in a previous time horizon still hold and have an explanatory power. The so-called normal price is usually a prediction of what an option price would be, using econometric models or techniques. And hence it is not unusual that this price will deviate from fair value.

The normal price of option is also known as average price of option.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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