Is there any way to find if BankNifty CE or PE premium is high or low? I have seen people talking about not much profit due to low premiums. How do they conclude that the premium is high or low during weekly bank expiry
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you require a lot of experience to judge about premium.
Usually INDIAVIX above 22 will give good premium with 200-300 point in nifty
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Look at premium as a % and judge based on duration left.
If a specific strike price’s IV is high it indicates that premiums are high. VIX is also an indicator. If VIX is high that means premiums are high.
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Check the IVP see how its trading…check to see if there has been an IVCrush…also the option chain and LTP should give you a good idea
Thank you all!
how much value of a strike price’s IV is considered to be high?
It depends on the underlying. For index (nifty and Banknifty) generally above 20-25 is considered as high IV. But for stock options it is really hard to specify high IV. For large cap generally 30 is considered as low IV. We cannot specify a number for stock options easily. Say last 1 year IV of a stock ranged between 30 and 80 . If its current IV is 60 then it is said to be that stock has high IV. ITC has normal IV around 25. SBI has around 35. PVR iv is around 45. So it varies from stock to stock and to specify low and high IV for stock options we need to see historical data and specify. For Nifty and Banknifty above 20-25 is high IV.