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Homework answers / question archive / identify the potential reasons for options miss-pricing
identify the potential reasons for options miss-pricing
The reasons for options mis-pricing are :
i) Underlying Price - If the underlying price is mispriced then the option price is mispriced .
ii) Implied Volatility - it is a estimated factor which can be incorrect which will lead to mispricing .
iii)Dividend - Options do not receive , so their value fluctuates when dividends are released .