I am unable to wrap my head around the prices of options once the contract is sold, who determines the price with greeks like are people in firms using options calculator to discover the prices?Like why options prices aren’t irrational and always bound with option greeks?Who are these people who change the price suppose when index is moving so according the gamma the option price is increasing , how and why?
all options greeks (to the nth degree) are derived from the price of options. It’s simple math that you can google the formula for.
The price of the option is derived from the open market’s expected move. For indices, its the combination of expected moves of the individual stocks that it holds based on the weightage.
The expected moves of individual stocks are also derived from the open market’s expected move. The expected move is only an estimate. Hence over large sample sets it naturally falls under the bell curve of normal distribution.
If you have observed market for a fair amount of time then this is not really the case always. Instruments that trade in the market are moved by money. It doesn’t strictly adhere to any formula.
Greeks based on a questionable formula is IMO complicating simple stuff. Good for sounding intellectual or selling option trading apps but not needed to make money from the market.
all greeks serve a purpose. They are very useful when deploying highly specific strategies.
You need not get intimidated by them 
Once you get a hold of them, you will use it effortlessly.
Greeks are not intimidating. They are just questionable. If money were to follow a model it may hold good in option price and derivative (greeks) estimation, which is what is happening where it matches. But money can also cause the option price to deviate away from the model which is my point. Hence better to follow where money is going rather than the Greeks.
I don’t think you understand how options greeks/models work. They are all just probabilistic expressions of random events.
When something fails very often I call it incorrect. Just looks at the variations and adjustments done on the basic Black Scholes formula to make the results approximate more closely with real world values. Besides what Warren Buffet had to say on the formula is very relevant here.
You need to read more and try to understand the basics of the options greek i suppose. They have nothing to do with influencing pricing of options, they are a derivative of option prices.
Now, for options models. B&S is only a scientific model to approximate option prices & often detached from reality. I’m advocating to use and understand greeks. I’m not advocating to use a model blindly (without knowing it’s blindspots).
I’m sure ajit jain from berkshire doesn’t use b&s but has his own metrics and models to arrive at a ‘fair market price’.
I guess u didn’t read my post where I called greeks as derivatives. Greeks may be computed from estimated option prices but those option prices are estimated using BS.
A scientific model detached from reality is not a good model.
And so do many others because BS is flawed.
you were the one who brought up b&s, i didn’t advocate to use it.
You brought in greeks which are derivatives of estimated option prices using BS. So BS was already there.
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okay, clearly you don’t understand what b&s is (or greeks). b&s is just one of many models used to estimate ‘fair pricing of options’.
greeks on the other hand, are derivatives of actual market price of options. They are not models, they are calculated based on actual market price at any given moment.
Who estimates these realtime prices for options ? Like as a retailer I just have to ride the wave if I want to trade the premium?
So BS model is different from greeks? Greeks are just a derivate or variables to make a sense of those options?
Every market participant does. Based on your view, you can choose to take any sort of trade you want.
I mean who is deciding what the price of an option should be fair value to trade? and what model are they using ? what goes into the decision of option pricing suppose expiring ? expected move , volatility ?Please provide the terms
While a model is used to assess whether the price of an option is fair or not, b&s is the most popular one to do so.
Different platforms compute greeks differently. Some using actual prices, some using estimated prices using b&s or a variety of it.
expected move = volatility. Every market participant will use his/her own metrics to decide. It’s doesn’t really matter because markets are anyway random. You use greeks to gauge the kind of trade you wish to take and the exact parameters you want.
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the picture is getting clear now, the whole pricing is people trying to gauge and make a model for their convenience? the price could be anything just they want it to land into moneyness , right?
you cleared a few concepts for me .