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+Chapter 37: How Volah'lity Affects Popular Strategies 763 
+all, but the longer the life of the option, the more the other factors influence the 
+"excess value." 
+The five factors influencing excess value are: 
+1. stock price movements, 
+2. changes in implied volatility, 
+3. the passage of time, 
+4. changes in the dividend (if any exist), and 
+5. changes in interest rates. 
+Each is stated in terms of a movement or change; that is, these are not static 
+things. In fact, to measure them one uses the "greeks": delta, vega, theta, (there is no 
+"greek" for dividend change), and rho. Typically, the effect of a change in dividend or 
+a change in interest rate is small (although a large dividend change or an interest rate 
+change on a very long-term option can produce visible changes in the prices of 
+options). 
+If everything remains static, then time decay will eventually wipe out all of the 
+excess value of an option. That's why it's called time value premium. But things don't 
+ever remain static, and on a daily basis, time decay is small, so it is the remaining two 
+factors that are most important. 
+Example: XYZ is trading at 82 in late November. The January 80 call is trading at 8. 
+Thus, the intrinsic value is 2 (82 minus 80) and the excess value is 6 (8 minus 2). If 
+the stock is still at 82 at January expiration, the option will of course only be worth 2, 
+and one will say that the 6 points of excess value that was lost was due to time decay. 
+But on that day in late November, the other factors are much more dominant. 
+On this particular day, the implied volatility of this option is just over 50%. One 
+can determine that the call's greeks are: 
+Delta: 0.60 
+Vega: 0.13 
+Theta: -0.06 
+This means, for example, that time decay is only 6 cents per day. It would 
+increase as time went by, but even with a day or so to go, theta would not increase 
+above about 20 cents unless volatility increased or the stock moved closer to the 
+strike price. 
+From the above figures, one can see - and this should be intuitively appealing that 
+the biggest factor influencing the price of the option is stock price movement (delta).