Hi Everyone I’m freshers here. I hope i will Earn knowledge here by exchanging topics
My question about Premium Variation in Option Trading
On 08-May-2020 Just Dial Price was 340. Same time Premium was 7.7 for Just Dial May 400 CE . When i check today Stock has reached 349.85 But premium is 5.95. How it is possible?
I have’t checked the exact details of the stock, but there are 2 possible reasons.
- Theta decay( i.e. the closer you are to the expiry, the lower your chances of reaching strike price if OTM, hence the reduced price).
- Implied volatility
You should first read & understand all the topics of Zerodha Varsity. Well organized articles written in a friendly manner.