Factors Affecting Option Premium - Six primary factors influence options pricing. They are the underlying price, strike price, time until expiration, volatility, interest rates and dividends.

Price of Underlying- A change in an underlying results in a simultaneous change in the price of the derivative asset that it is linked to. he value of a call goes up as the price of the underlying asset rises, all other things remain equal and the value of a put goes down as the price of the underlying asset rises, all other things remain equal.

Strike price-As the strike price increases, the value of the call option decreases and as the strike price increases, the put option increases

Volatility - is a measure of uncertainty about future changes in price of the underlying asset. The value of both puts and calls rises as the volatility of the underlying asset increases.

Time to expiry- the value of both puts and calls goes up as the time to expiration increases, all other things must remain equal

Interest rate - As the risk-free interest rate rises, the value of a call option rises and put option value decreases.

Dividends- As dividends are announced , the value of a call option falls and put option value increases.