The price of the call contract must act as a proxy response for the valuation of 1 the estimated time value — thought of as the likelihood of the call finishing in-the-money and 2 the intrinsic value of the option, defined as the difference between the strike price and the market value multiplied by max[S-X, 0].
Determining this value is one of the central functions of financial mathematics. The most common method used is the Black—Scholes formula. Importantly, the Black-Scholes formula provides an estimate of the price of European-style options.
Adjustment to Call Option: When a call has the formula valorii timpului opțiunii price above the break even limit, i. Some of them are as follows: Sell the call and book profit.
Continue to hold the position, if there is hope of making more money. Buy a protective "put" of the strike that suits, If there is interest in holding the position but at the same time, having some protection.
Sell a call of higher strike price and convert the position into "call spread" and thus limiting loss if the market reverses. Similarly, if the buyer is making loss on his or her position i.