0

Usually when you have an option change, the further OTM you go, the premium drops for the same expiry date. But if we look at the Mar 2015 Call and Put option chains for VIXY, it seems this is not always true.enter image description here

Calls are on left, puts on right. How come the call for strike 27 is 1.45, which the strike 26 is 1.40?

  • Isn't that just the last traded price? Options don't trade as often as stocks, so the last traded prices for different option could be from different time periods. – Victor Feb 10 '15 at 20:42
1

1.45 and 1.40 are the last trade prices. The last trade (1.45) for the 27 strike call must have occurred earlier than the last trade (1.40) for the 26 strike call. These options have low liquidity and don't trade very often. You have to look at the bid and ask prices to see what people are currently bidding and asking for those options. As you can see, the premium based on the bids and asks does decrease the further you go out of the money.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.