Option Math To Expiration For Short Calls And Puts

In contrast to the math to expiration and profitability for long options being based on intrinsic value, the option math for short options is based on time value – the amount that you sold the option for that is time value at expiration is the profit in your trade.

Option Math To Expiration For Long Calls And Puts

Understanding long options trading math to expiration is the starting point for understanding other trading math, like figuring out how much and in what direction an option day trade will move. The value of long options at expiration is based on its intrinsic value, or the amount the option is in the money at that time.