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A very definite
YES!
The second most
important thing, in my opinion, that affects the price
of an option is Volatility.
The basic description
of volatility is the daily price fluctuations of the
underlying commodity. The bigger the price moves, the
more expensive the option.
The reason for this
seems to be because the option sellers are taking a
bigger risk that the option will expire "In The
Money". The sellers are actually hoping that the
option will expire worthless.
Volatility can be a
good thing for buyers though, if you happen to buy at a
time when volatility is low and then it picks up. Then
your option will increase in value just for that reason.
But the opposite is
true if you buy when volatility is high and then drops.
If you buy at a time
when volatility is high, and it stays high, it probably
won't make that much of a difference.
There are more advanced
forms of volatility, like historic volatility, which
measures volatility over a period of time. And also
Implied volatility, which is a theoretical value
designed to represent the expected volatility of the contract
underlying the option, derived from the options price
and other factors, which you probably won't need
except in the more advanced forms of option trading.
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