In the chart, the current price of the underlying is 135. The last price of the option is 23.58. BID is 23.00 and the ASK is 23.90.

I want to wait until the price of the underlying drops to 125 and then initiate a BUY CALL. I assume that in a week or month when the price of the underlying drops to 125, the ASK price of 29.15 wont be correct. How can I calculate the ASK price when the price of the underlying stock will be 125?

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You need an option pricing formula to guestimate an option's future price. Here are two:

Calculator 1


The second one requires a free sign up. It's good because it will pull in actual market prices.

The two wild cards in your calculation are when the underlying hits $125 and what the implied volatility will be on that date.

I'd sooner set a price alert on the stock than guess what a fair price will be for the call at some future date and unknown IV. If the stock hits the alert price, tune in and see if you still have the same mindset (inclined to buy).


Use any one of the online option calculators. Plug in an underlying on 125 and an implied volatility of 70%. You won't know what the implied volatility actually is, but using the current 70% (I'm assuming that's the last column on your chart) should give you a rough guess. You might also see how much the price is different if you use 68% or 72% to give you a range to shoot for.

Since you also won't know when the underlying will move to 125 you might play around with time to maturity as well, but that won;t make as much difference as volatility.

Although if you know that the underlying will drop to 125 in a week or month, then there are better strategies than putting in a limit order on a call option :)

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