Hello Everybody: I have a question regarding Option quotes. Why is it that when the price of the underlying is moving up, some call prices decrease and some put prices increase. Shouldn't all calls appreciate in value when the stock price is moving up? why some of them are moving in the opposite direction? For example, today YHOO is at 36.93 + 0.28 (around 12:50pm) and as per the live streaming quotes of CBOE, prices of some calls and some puts are moving in the opposite direction! (see quote page for June17 monthly option). Will appreciate your input and comments! Thanks a lot.
Option prices do not move in tandem with the underlying mostly due to time decay and changes in volatility.
the options and the underlying are completely separate markets, and thus are subject to supply/demand etc. e.g. when a stock moves up there may be a supply of unhappy call owners who will take the opportunity to dump their calls... increasing the supply of calls and moving the call price down. When a stock moves down there may be a supply of owners of the stock that will be inspired to buy puts in order to protect their position... rather than just bail... moving put prices up. Whatever happens you can find a scenario to explain it but... If you are a trader it doesn't pay to spend your time tying to rationalize the coordinated or uncoordinated movements. I just trade the market I'm in.