Options profits?

General
1

Hi

Once spot price is greater than strike pride, then does the increase in rate of profit increase drastically?

Ex -call option
spot price at 10am = 93
Strike price = 95
Spot pride @ 11am = 95
Spot price @ 12pm = 97

Increase in spot price btwn 10am - 11am = 2rs
Increase in spot price btwn 11 - 12pm = 2rs

However, note that @ 11am, spot price was > strike price

Assuming all factors that effect premium, except spot price remain the same, then would the increase in premium btwn 10am - 11am be the same as increase in premium btwn 11am-12pm?

Or due to fact that spot price > strike price, will a increase in the underlying after spot price > strike price, cause a more exponential increase in the premium, for the same amount Of increase in underlying ?

2

Short answer is yes - premium and therefore your P&L increases exponentially while trading options.

However, there are multiples forces acting on the premium. I’d suggest you read on options theory here - http://zerodha.com/varsity/module/option-theory/

3

I have option expiring in 27th apr

If i sell them when the stock is under ban
Will I have to pay a penalty?

4

You don’t have to pay penalty

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5

Thank you!
Thank you!
Thank you!