Which factor is NOT considered to affect option prices?

Market demand is not typically considered a direct factor affecting option prices. The price of an option, which is essentially the right to buy or sell an underlying asset at a predetermined price, is influenced primarily by other specific quantitative factors.

Stock price affects option prices because the current price of the underlying asset determines the intrinsic value of both call and put options. As the stock price fluctuates, the value of the options adjusts correspondingly.

The strike price is another crucial factor because it defines the price at which a call or put option can be exercised. The relationship between the strike price and the stock price directly influences whether the option is in-the-money, at-the-money, or out-of-the-money, which subsequently affects its pricing.

Interest rates play a role as well, particularly in the context of the time value of money. Higher interest rates may increase call option prices because the cost of carrying the underlying stock is effectively lower when financed at a higher interest rate, while put options may be adversely affected.

In contrast, market demand, while it can impact overall market dynamics and possibly impact bid-ask spreads or liquidity for options, is not a direct factor utilized in the pricing models of options like the Black-Scholes model. Thus, it is less relevant when evaluating