Why Do Options with the Same Strike Price but Different Expiration Dates Have Different Premiums?
Options with the same strike price but different expiration dates have different premiums primarily due to the difference in their extrinsic (time) value. The option with the longer time to expiration will have a higher extrinsic value because there is more time for the underlying asset's price to move favorably, increasing the probability of a profitable outcome.
All else being equal, the longer-dated option will always be more expensive than the shorter-dated option.
Glossar
Same Strike Price
Option ⎊ Within cryptocurrency derivatives, a same-strike price scenario arises when multiple contracts share the identical strike price, a crucial factor influencing market dynamics and trading strategies.
Expiration Dates
Maturity ⎊ Expiration Dates define the precise moment when a derivative contract, such as an option or a future, ceases to exist and its final settlement terms are executed.
Different Expiration Dates
Horizon ⎊ Different expiration dates in cryptocurrency derivatives, particularly options and perpetual futures, introduce a layer of complexity regarding time value decay and potential assignment risk.