Premium price variation

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.

  1. 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).
  2. Implied volatility

You should first read & understand all the topics of Zerodha Varsity. Well organized articles written in a friendly manner.

You can also learn from

https://fyers.in/school-of-stocks/module/options.html