InvestorQ : Does the strike price or the exercise price of the option impact the value? Is it true that dividends impact option price when option holders do not earn dividends?
shrinidhi Rajan made post

Does the strike price or the exercise price of the option impact the value? Is it true that dividends impact option price when option holders do not earn dividends?

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Riya Dwivedi answered.
3 years ago
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There are 2 factors that negatively impact the value of a call option. Let us look at the strike price first. When it comes to a call option, the low strikes will always be more valuable than the higher strikes. So as you move lower down the strikes, you see the value of the call option increasing. Then what about dividends? One can argue that option holders do not earn dividends. But stock holders do and dividend payments reduce the stock price and therefore reduce the value of the call option.

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