Overpriced option vs theo value

Discussion in 'Options' started by a529612, Jun 6, 2006.

  1. I'm bullish on a stock and the put I want to short trades at 1.2 while the OX pricer gives my a theo value of only 0.6. Does this trade looks like a no brainer or am I missing something?
  2. Check the IV input and compare it to the actual implied volatility.
  3. OX is using a even higher volatility than mine. So the put should be even cheaper? :confused:
  4. Often OX just plugs in a default value and it is meaningless. If you plug in the current IV you will get the current value of the option. If youhave a different basis for making a different estimation of IV in the fuutre then you can plug in your own estimate and determine if the option is under or overvalued according to your estimate. Otherwise the number OX plugs in is really worthless if it is random :).