Options Glossary

Glossary: Overvalued

Last Updated: July 12, 2015



What Does Overvalued Mean in Options Trading?

A description of an option contract when the prevailing price of the option, or any given financial instrument, is higher than the fair value of the option. This term is often used by traders to express their view of the future price of the security. I.e., if an option contract is overvalued, the trader believes the option contract price will fall and therefore is a good short candidate.

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