Hi, Is it possible to calculate what an options premium would be based at a stock pice in the future.
Eg. Let's say I expect Cifr stock to be $30 in the future is there a way to know what premium I would be paid to write a weekly covered call with a 35$ strike
Thank you
Calculating future premiums
byu/SpecificStatus6832 inoptions
Posted by SpecificStatus6832
8 Comments
You can pretty much know the intrinsic value but not the extrinsic value. Since the total value is intrinsic+extrinsic, you wouldn’t be able to know the exact value.
OptionStrat app, its free if you don’t mind 20min delayed prices.
ThinkorSwim Tos Analyze Page
Use the GammaWins Calculator. Choose the option you are interested in, and you can either see a chart of the option’s premium based on the stock price at any given time before expiry (X-Axis: Price) or a chart of the premium over time given a fixed stock price (X-Axis: Time)
[https://www.gammawins.com/calc](https://www.gammawins.com/calc)
Note that IV has a huge impact on the premium, so the actual premium will be different based on the IV when you trade. You can also simulate that in the calculator by moving the IV slider.
(Disclaimer: I’m the developer of GammaWins)
yes, you can assume different scenarios over the lifetime of the position and put them in a black scholes calculator; you need to make assumptions on price and IV according to your thesis.
Accurately? No. You could *estimate* the volatility component by looking at past option prices with the same intrinsic value and under your estimated volatility conditions, but the time-value component of the premium is very much subject to the market’s expectations at the time, and it’s ambitious to think you’re going to nail those for future dates.
Subtract the option strike from current underlying price, the difference between that number & the option’s price is the premium.
If you’re asking what the future extrinsic value will be, no, there’s no way to know that beyond knowing it’s current extrinsic will decay relative to strike by expiration, but that doesn’t mean extrinsic can’t increase in the meantime.
Play around with this calculator:
https://www.optionsprofitcalculator.com
This is ideal circumstances and in real life there are extrinsic value from various things as well