What Influences an Option's Price?

What Influences an Option's Price?

There are seven factors that influence an option’s price:

1. The type of option (call or put)
2. The price of the underlying asset
3. The exercise price (or strike price) of the option
4. The expiration date
5. Volatility – Implied and Historical
6. Risk-free interest rate
7. Dividends and stock splits