The model is considered a classic example of an academic innovation that has been adopted widely in practice. The volatility of the option s underlying stock . Any stock s volatility can be predicted to an extent by the degree of volatility it has shown in the past. Wide fluctuations should increase the option s time value, because they can raise its monetary worth but not drive it below zero. The liquidity of the option and the underlying stock .
Liquidity is important to investors.
If the option is for the stock of a closely held company, it will be discounted for lack of marketability. The time left until the option expires . The time left until the option expires makes a difference, because a longer time gives the stock a greater chance to appreciate. Thus, a stock option with longer to go until expiration is worth more. Any dividends the company pays on the stock .