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Glossary Term: OPTION PRICING CURVE

Definition(s) for OPTION PRICING CURVE:


1. ) refers to a graphical representation of the projected price of an option at a fixed point in time. It reflects the amount of time value premium in the option for various stock prices, as well. The curve is generated by using a mathematical model. The delta (or hedge ratio) is the slope of a tangent line to the curve at a fixed stock price.

2. ) A graphical representation of the projected price of an option at a fixed point in time. It reflects the amount of time value premium in the option for various stock prices, as well. The curve is generated by using a mathematical model. The delta (or hedge ratio) is the slope of a tangent line to the curve at a fixed stock price. See also Delta, Hedge Ratio, and Model.

3. ) A graphical representation of the estimated theoretical value of an option at one point in time, at various prices of the underlying stock.



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