If in the beginning of March contract, Nifty Spot is @ 7200 & Nifty March futures is @ 7240. What will be the value of March 7000 CE without any premium? Rs. 200 or Rs. 240?

General
1

If in the beginning of March contract, Nifty Spot is @ 7200 & Nifty March futures is @ 7240.

What will be the value of March 7000 CE without any premium? Rs.200 or Rs.240?

Thank you

2

It will be minimum 240+time value. Check out varsity module on options pricing http://zerodha.com/varsity/

Even though options eventually get settled based on the value of the underlying on the expiry day. But they track futures until that day.

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3

The premium of options depends on Intrinsic value and Time value , for call option Intrinsic Value=(CMP-Strike Price) and Time Value = (Premium - Intrinsic Value).Pls refer Zerodha Varsity for more information.

4

So You mean to say that throughout the month the option will track the futures value only? even still it expires near spot!
Not including the time value, but minimum it has to 240 in the month beginning? right?