1. The strike price of the option is compared with the market call option. The higher the strike price, the lower the buyer’s profit possibility and the lower the option price.
The higher the strike price, the more likely the buyer is to make a profit and the higher the option price.
When the spot increases, the intrinsic value of the call option increases and the premium increases.
The intrinsic value of the put option falls and the premium becomes smaller.
2. Time to maturity (the number of days between the expiration date) An increase in the time to maturity will also increase the time value of the option, so the price of the option will also increase.
3. Expected exchange rate volatility The greater the volatility of exchange rate, the greater the possibility of the option holder making profits, the greater the risk that the option seller bears, and the higher the option price;
On the contrary, the lower the volatility of exchange rate, the lower the option price.
4. The higher the interest rate of selling stipulated in the foreign exchange option contract at the domestic and foreign levels, the higher the option price will be because the option holder can get more interest income from holding the currency before executing the option contract.