New to options , please clarify below

i am new to options ,someone please clarify?

nifty spot price is 16500
Sell nifty 16jun2022 17000 ce - 14 Rs Premium
Sell nifty 16jun2022 16000 pe - 20 Rs Premium
nifty spot price increased to 16800
As per Varsity pay off excel sheet Call Option Writer is in profit of 34 Rs …
wont the premiums change of 17000 ce and 16000 pe if nifty spot moved to 16800?
how much premiums will be affected? who will be in losses buyer or seller? what could be approx premium values if nifty spot price moved 16800?

if spot price increasedto 16800 and 16500, the sold CE 1700 option price will go up resulting in a loss position. This should more less be offset by the decline in value of 16000 PE (a +ve position), provided both strikes were selected to be delta neutral.

Present NIFTY → 16478

Before I answer this let me clarify most important concept of options; option pricing.

The options prices depend on Black-Scholes Model.

In short option prices depends on

  1. Underlying Price & Strike Price

  2. Time to Expiration

  3. Interest Rates

  4. Volatility

Let me Elaborate Volatility

Option pricing models require the trader to enter future volatility during the life of the option. Naturally, option traders don’t really know what it will be and have to guess by working the pricing model “backwards”. After all, the trader already knows the price at which the option is trading and can examine other variables including interest rates, dividends, and time left with a bit of research. As a result, the only missing number will be future volatility, which can be estimated from other inputs

These inputs form the core of implied volatility, a key measure used by option traders. It is called implied volatility (IV) because it allows traders to determine what they think future volatility is likely to be.

The Bottom Line

Options are complex, but their price can be described by just a handful of variables, most of which are known in advance. Only the volatility of the underlying asset remains a matter of estimation.

Let me reiterate the last point

Volatility of the underlying asset remains a matter of estimation.

Source :

Getting back to your question

They definitely will change.

But by how much depends on the above listed factors

I honestly did not understand this question. :sweat_smile:

Added this position to my virtual trade will try to keep you updated EOD starting tomorrow

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DATE : 09-06-2022

INDIA VIX - 19.14

NIFTY - 16,478.10


You need this or would this be a waste of my time ?

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Thankyou so much sir for your answering my query , i definately need this

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DATE : 10-06-2022

INDIA VIX - 19.58 (+2.30)

NIFTY - 16,201.80 (-1.68%)

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Here i have a few questions sir from your screenshot , 16201 spot

why premiums are shooting up fastly in the direction of market (20 to 75)and why not in opp direction ?

what happens if the buyer squared off position , assuming that seller want to hold these positions till expiry ? will the contract be transferred to new buyer or the position will be closed both for buyer and seller ?

I think you need to revisit your option basics

If market is moving up -------> CALL :arrow_up: & PUT :arrow_down:

If market is moving down ----> PUT :arrow_up: & CALL :arrow_down:


If market is moving up --------> We buy CALL (or) sell PUT

If market is moving down ----> We buy PUT (or) sell CALL

I think I need to clear one concept for you.

You are thinking that if I buy a contract from you.

For sure I should sell it to you and you only.

or vice-versa.

Nope, that isn’t a rule.

Let’s say I sell & you buy

Next you want to square off your position by selling.

Now you can sell that contract to anyone who is willing to buy.

Just assume it as you are buying a piece of land from me.

There isn’t a rule that you should sell it to me only.

There are many people who want to buy.

You will sell it at the best price you get.

So, position will only be squared off for the person who wants to exit.

Hope you got this.