While interest rates are not the only factors that affect the futures prices (other factors are underlying price, interest (dividend) income, storage costs, and convenience yield), in a no- arbitrage environment, risk-free interest rates should explain futures prices. If a trader buys a non-interest Effect of interest rate on options prices. This might be another basic derivatives question. When interest rate rises, stock prices generally fall. Assuming an option's underlying is a stock, this should lower the option's price as well. However, according to many sources, when interest rate rises, options prices rise. Factors having a significant effect on options premium include: Underlying price; Strike; Time until expiration; Implied volatility; Dividends; Interest rate; Dividends and risk-free interest rate have a lesser effect. Changes in the underlying security price can increase or decrease the value of an option. These price changes have opposite effects on calls and puts.