Option pricing isn’t magic — but it is more complex than pricing shares.
At its core, an option’s premium is driven by supply and demand. What buyers are willing to pay, and what sellers are willing to accept. That demand is shaped by expectations: where the share price might go, how long there is until expiry, and how risky the move could be.
To use options effectively, traders need to understand what actually moves premiums — and why.
3.1 The Mai...

Standard option contracts and market structure
Equity options are standardised contracts, with each option typically representing 100 shares of the underlying stock. When you buy or sell a single option contract, you are taking on rights or obligations related to those 100 shares at a predetermined strike price. This standardisation is a cornerstone of the options market, supporting liquidity, transparent pricing, ...

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