Explain me the Put Pricing Strategy

General
1

Hi, Can you please clarify how the price of Option u have calculated as
A 9000 call has a value of 1000, a 8000 call has a value of 2000 and so on If Bank nifty closes at 10000,how are you determining price .Should the price be 1000 or any premium attached to it for 8000 call in above case.

Also How is the price of a call and put of any scrip/Nifty determined ?

e.g While posting this below are the closing of Nifty
NIFTY 30Jul2015 8381.85
NIFTY 8368.50
however how is the price of all the call and put option determined. What is the algorithm for calculation ??

can you suggest a good book for my clear understanding of Options/Call/Put

Thanks
Rohit Jain

2

That is a very broad question, you have to check this out: http://zerodha.com/varsity/

Check for the 4th chapter on options, I’d say best to start from the futures module.

3

hi,

First of all, Option pricing is based on three parameters, that is price,time,volatility…so even if the strike price and actual price is near, if there is no volatility or time, then price fall and vice versa.

you can follow these option books…

The Option Trader Handbook -Strategies and Trade Adjustments…from GEORGE JABBOUR AND PHILIP BUDWICK.

The Bible of Option Strategies-The Definitive guide for practical Trading Strategies… from Guy Cohen