In the derivatives Options.
When we are give expected spot rates and their probabilities. We calculate IV (Intrinsic Value) so eventually TV keeps on changing.
But how come in this attached question. The premium keeps on changing. Other than this also there are other questions also where premium keeps on changing.
Isn’t premium fixed in the beginning and paid already in the beginning?
Option premium keeps on changing due to the effect of time and volatility in stock price.
Oh okay, thanks a lot!