theoretical value

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Theoretical value

Applies to derivative products. Mathematically determined value of a derivative instrument as dictated by a pricing model such as the Black-Scholes model.

Theoretical Value

In options and futures contracts, a mathematically derived estimate of the value of the contract. The most frequently used method to calculate the theoretical value is the Black-Scholes Pricing Model. Depending upon the efficiency of the market and/or the presence of inside information, an option may trade at, above, or below its theoretical value. The concept has come under criticism for not accurately describing true market value: because theoretical value is based on past performance, it does not take into account potential future events such as changes in demand.

theoretical value

The calculated price at which a security should sell. Depending upon investor expectations and market imperfections, a security may sell at a price above or below its theoretical value.
References in periodicals archive ?
Rival Traders' Electronic Eye defines what orders to automatically buy or sell based on parameters set by the user around their theoretical values.
The key points and properties of T-[theta] curve presented in Figure 2 will be used in this study for comparative analysis between experimental and theoretical values (Section 5).
In the self-affirmation condition, participants were asked to rank six values - including aesthetic, social, political, religious, economic, and theoretical values - from most to least important.
09[micro]m particle size and slightly below the theoretical values for the other two sizes (note that the theoretical values were determined based upon the measured stage airflow splits).
Table 1: comparison of theoretical and measured at various depth Depth Meter (mm) Theoretical values Measured value of Porosity of Porosity 0.
However, they did not observe any interaction effects during combustion because no differences between theoretical values and experimental values of the DTG curves were noted.
4% from theoretical values as measured by CHN microanalysis indicates that the sample is not completely pure.
A car always has a value and cannot be compared to theoretical values such as those held by Lehmans brothers or Swiss Air," the company said on its website.
In the area of the critical frequency the difference between the measured and the theoretical values reaches it's maximum distance.