Theoretical price of an option
This query is : Open
Querist : Anonymous
Querist :
Anonymous
(Querist)
07 February 2017
is theoretical price of an option same as its intrinsic value
Expert : Anonymous
Expert :
Anonymous
(Expert)
08 February 2017
not necessary.
theoretical price is driven from various models whereas Intrinsic value in case of call or put is difference between spot price and strike price.
and for futures it is present value of exercise value discounted at prevailing market risk free rate.
Refer ICAI Studymate of SFM
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