On Friday 12/11/04 I bought 2 NAB Jan Put option. $0.69 per shares. The time that I bought the option NAB was trading at $28.45.
This morning (Mon 15/11/04) NAB drop down to as low as $27.52. I was quite happy to sell it when NAB about $27.70, but when I check the option spread, it is $0.58 - $0.61.
I don't understand, how can the out of the money option cost more than in the money option?
is this to do with NAB go ex-dividend? does the option price already factor in the dividend amount? if it does, is there a formulae to do this.
Thank you for your help and comments