1.   Given that this relationship is the determinant of whether the investor has made a profit or loss, it is of primary importance in determining the option premium.

2.   The time value components of the option premiums quoted get larger as the time to expiry lengthens.

3.   Despite the influence of interest rates, the movement of the underlying share price is the principal determinant of changes in option premiums.

4.   Secondly, dividend policy may have an important effect on both the level and degree of volatility of option premiums.

5.   From the foregoing discussion it follows that high dividend payouts are likely to have a larger negative effect than low dividend payouts on option premiums.

6.   Lastly, option premiums are likely to be affected by the expectations about the company which issued the underlying shares.

7.   Another specific influence on both share prices and option premiums is the expectation and likelihood of a contested takeover.

8.   It is also dependent on the exercise price and the option premiums.