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Moomoo wants to work better for you: Help optimize moomoo's options trading features
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Hedge with Options series - Options Price Calculator

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To the Moo joined discussion · May 24, 2023 21:58
Hello, Mooers! Welcome to the Hedge with Options on moomoo series. Today we'll discuss the Options Price Calculator.
Mooers often ask us: “Is now a good time to buy this option, or will the price suddenly tank after I buy it?”
Although we can't tell the future or provide investment advice, we've created the Options Price Calculator to help you make a more informed decision. The calculator can help you estimate the theoretical value of an option or determine if its current pricing is reasonable to you or not. Experienced mooers may even use this tool for potential trading opportunities of individual stocks or options!
What is an option's price?
An option's price is primarily made up of two parts: intrinsic value and time value.
Intrinsic value is a measure of an option's profitability resulting from its immediate exercise.
In other words, the intrinsic value is the value a given option may have if it were exercised today.
For example, if a current fictional company's stock is worth $151/share, your call options will maintain their intrinsic value if the strike price is lower than $151/share. It will lose its intrinsic value if the strike price is higher than $151/value.
Time value is influenced, among other factors, by how much (or how little) time is remaining until an option expires.
Time value is any premium in excess of intrinsic value before expiration. It's often explained as the amount an investor is willing to pay for an option above its intrinsic value. Typically, the longer time it takes for the option to expire, the greater its time value.
For example, if you wanted to buy the XYZ call option at a strike price of $165 on their expiration date, the time value of options that expire on Jun 23 is $8 which is higher than $5.15 on May 19.
Hedge with Options series - Options Price Calculator
source: moomoo, data dated 2023/5/5
What is moomoo Options Price Calculator?
The Options Price Calculator is a tool that uses a mathematical model that calculates the theoretical price of option contracts and estimates potential changes in the price by adjusting different parameters.
Date: You can choose between the current date and the expiration date
Underlying price: You can enter the market price to estimate the theoretical price of the option contract.
IV ( Implied volatility): You may refer to historical volatility or average implied volatility
Interest rate: It is the US Treasury yield, and the default value is usually 1%
Here's an example of moomoo Options Price Calculator:
Hedge with Options series - Options Price Calculator
Want to learn more about how moomoo's Options Price Calculator can help with your options trading? Here's a video that explains more:
Interactive rewards:
Share your thoughts for a chance at rewards. On the moomoo community, share your understanding of the option price calculator and how this tool helped you. 5 comments will be drawn for a chance of 50 points rewards each.(The interactive rewards is valid until June 30th.)
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All contents such as comments and links posted or shared by users of the community are the opinion of the respective authors only and do not reflect the opinions, views, or positions of Moomoo Financial Inc., Moomoo Technologies, any affiliates, or any employees of MFI, MTI or its affiliates. Please consult with a qualified financial professional for your personal financial planning and tax situations. Any testimonials provided herein may not represent other customers' experience, and there is no guarantee of future performance or success. Your experience may be different than the ones represented here.Moomoo Points may be redeemed only through the moomoo app and have no other value.Option Price Calculator- IMPORTANT: The tool performs calculations based on model assumptions and other inputs and variables that you select. The projections or other information generated by the Options Price Calculator regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time.
Disclaimer:
Options trading entails significant risk and is not appropriate for all customers. It is important that investors read the Characteristics and Risks of Standardized Options (https://Bit.ly/MoomooODD) before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request. Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options.This article is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal.Moomoo is a financial information and trading app offered by Moomoo Technologies Inc. Securities are offered through Moomoo Financial Inc., Member FINRA/SIPC.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more
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