Today is probably a strange day when both puts and calls are trading in red, with 20-50% losses on both sides…
What could be the reason for this?
Factors which affect option prices:
- Price of the underlying scrip
- Prevalent market interest rates
- Time to expiry
- Expected Volatility
- Available market
I could be missing a few, feel free to add factors to the list and deduce the causality.
Before an event, traders buy both puts and calls making both overvalued
Event being Fed rate decision
Its just a guess, i dont trade currency
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volatality declines after event so i.v goes down and also time decay in options .
Expiry is next Thursday, Christmas holidays in the Wild West. Basically, no underlying to trade on.
@Sensibull @Abid_E_H your thoughts?
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