Volatility of stock in stock markets depends on time
Volatility of the underlying stock must be considered in addition to "price movement" as it is discussed in the above paragraph. This is because if the market defines the underlying stock as being highly volatile and interprets it as being in a bull phase, premiums for the underlying calls will be higher than normal; if it is interpreted as being in a bear phase, then the puts will be commanding a higher premium.
The time remaining until expiration is a very important factor. You would be much less willing to buy an option with a very close expiration date than one which has an expiration date allowing plenty of time for the underlying stock to increase or decrease in value (depending upon whether you are a writer or a buyer of puts or calls). Time is a precious commodity in options trading, and traders are willing to pay for it.
Importance of striking price in stock markets
Above the striking price means intrinsic value for calls; and below the striking price means intrinsic value for puts. Thus, where the price of the underlying stock is in relation to that striking price will also affect the related options, generally placing upside pressure on calls and downside pressure on puts. At ex-dividend date, the calls usually follow the decline that also occurs in the underlying stock unless they are far out of the money, and the puts usually increase in value unless they are far out-of-the-money.
Interest rates represent a big impact on the price of options. Usually, the higher the interest rates, the higher the call premiums. This is because the writers of options are going to lose interest in playing equity options for income if there are better opportunities with less risk. This is one example where opportunity costs influence market activity.
Leverage from stock Purchase warrants
The low price of stock purchase warrants gives these equity privileges the same type of built-in leverage that puts and calls offer. This is what makes them very popular with speculators looking for faster-paced trading activity than they will find with stocks. For just hundreds of dollars, speculators have the advantage here of being able to maintain a position equivalent to what would ordinarily require thousands of dollars in the underlying stock.
Warrants also have their money positions. If a warrant has an exercise price above the current market value of the stock, then it is out-of-the-money and has no intrinsic value. Usually when a warrant is first offered, it has no intrinsic value; but it will have time value, nonetheless.
If a warrant has an exercise price below the current market value of the stock, then it is in-the-money and has intrinsic value as well as time value. Usually a stock-purchase warrant is out-of-the-money when first offered. There is also a period after issue, usually about one year, before the warrant can be used.
Making Money with stock Purchase warrants
You purchase newly issued warrants for Albert Construction stock, each of which entitles you to purchase two shares of the underlying stock for $10. The stock is currently selling at $8 per share, which means that the warrants are out-of-the-money, because currently you cannot exercise your option.
You have paid $2 per share for the warrants nonetheless, because you feel the stock will go up in time, and you equate that time value to be worth $2 per warrant. For once you are right, and the stock does indeed go up. The value of your warrant now increases accordingly.