AlbertRict
05-09-2016,
Hi...kind of new to options trading, so sorry if this is a dumb question.
My understanding is that a call option becomes more expensive the closer the strike price is to the current price.
For example, for a $100 stock, the price of a $101 option would be more expensive than a $105 option since the stock is more likely to be in the money at expiration.
But for some option chains, I'm seeing the reverse: an option with a higher strike price being MORE expensive than one with a lower strike price.
Why would this be?
My understanding is that a call option becomes more expensive the closer the strike price is to the current price.
For example, for a $100 stock, the price of a $101 option would be more expensive than a $105 option since the stock is more likely to be in the money at expiration.
But for some option chains, I'm seeing the reverse: an option with a higher strike price being MORE expensive than one with a lower strike price.
Why would this be?