Derivatives

No-Cost Collar

May 26, 2020
Derivatives

Normal Price of Option

May 26, 2020

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An estimated price of an option based on the premise that the relationships between the underlying price and the option price (premium) 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, made using econometric models or techniques. And hence it is not unusual that this price will deviate from fair value.

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

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