can anyone help me solve this problem from options as i am a newbie.
i am stuck in a situation say below: if i want to do delta neutral strategy for today and sell the next day, what will be my profit and loss:
example:
on today:
in delta neutral strategy:
say underlying nifty index @ 8430 when i did the delta neutral
and buy a 8450 CE ATM with premium 153
and buy a 8450 PE ATM with premium 155.55
now, tommorow, if say,
i exited the delta neutral when market underlying nifty is @ 8514.3,
then, i am having the following:
intrinsic value for 8450 CE and my question is
what about put option premium and call option premium.
do all of my premium from the loss making put option will be lost or only the part of it is lost even if the market is not in my favoured direction. and is the premium from call option i get to retain as market is in my favoured direction. please help.
Options prices looks very simple to a newbie… but are not that simple.
Option pricing and the movement of the option prices depends on may factors.
You need to check the option characteristics such as delta and theta… to know how much decay per day and how much you gain per point movement in the underlying stocks…
Volatility is the biggest factor for option price movement.
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