Why would an investor pay more for an option than the theoretical fair value? There are many reasons, all of which involvereal world events that factor into their decision. The most common reason is that an earnings announcement is upcoming. Typically, a stock moves either up or down a fair bit when earnings are announced, as the company either beats or doesn't meet earning expectations. You might think this would be the perfect time to buy a call, as there is a chance the stock makes a big move in the coming days. Of course, everyone else in the market also thinks this and wants to get in on the action. Demand from lots of buyers of an option will cause the price of the option to go up. (Just like how lots of demand from home buyers or concert-goers allows for sellers to charge more) It goes the other way too, as option sellers know their worth and aren't going to sell an option that could double in the coming days for cheap. Since these options are going for more than they usually would, implied volatility for them increases. However, after the announcement, implied volatility (and the price of the option) rapidly collapse to normal levels. This is known as "IV crush" and is one of the biggest gotchas for new option traders.