Premium Price when Spot price same in 2 days

Respected Sir?Madam

For one contract ex NTPC MAY 90PE . Day to Day premium price will be same or differ? When spot price trading in same price?

Example NTPC MAY 90PE,

10-05-2020 NTPC 87.50
11-05-2020 NTPC 87.50

Thank

Even if stock’s price remains same, Options price won’t, it’ll infact decrease.

In normal circumstances if the s5ock price doesn’t move, option price should decrease. This rule may not work when volatility increases.

Please try and learn greeks

It will come very handy

I will give you an example.

If you have 1 lac in your suitcase and it’s lying idle without any increase or decrease.

After 2 years, will the one lac remain as one lac? Yes
Will the purchasing power of that idle money reduce? Yes

Same with buying options
You buy only because you believe that the underlying stock will see a massive thrust in the coming days or so.

Options are instruments that are used because of a strong conviction. If you trade options passively, you will lose your last penny

2 Likes

Sir I think if spot price of underlying stays same then also premium will decay but as in the above case there might be increase in vix which have resulted premium remaining same

Completely agree with you.

It needs a lot of vega to retain the same price value.

It usually occurs when volatility drove the price both ways during two consecutive sessions
ie. a sharp down followed by a sharp up.

Drop in vega will surely bring the option price down

Thank for all experts given your valuable time. Thanks lot…

Sir If we are trading based on Premium , if our stop loss triggered . what will be the loss?

Example: NTPC MAY 90PE

Premium brought at 4 target 7 Stop Loss 2

Premium Paid: While we buying NTPC 4800*4=19200

WHAT IS OUR LOSS?

Premium 19200 or 48004 - 48002 =9600

Lot size into number of stop loss points

4800 * 2

Thank you Joe Chris sir …thanks lot:heart_eyes:

1 Like

Sir While trading in option if we select NRML we can hold our trade till expiry right?

1 Like

Yes my friend,

You can hold it as long as you want until expiry.

If you are attempting options buying for the first time, please engage a mentor

Sure Sir…Thank

Is there any demo trading account in Zarodha for Option Trading?

Can try Sensibull paper trading.

Is it paid version or free platform?

Thaks got link i think 7 days free https://papertrade.sensibull.com/

https://papertrade.sensibull.com/ you can make paper trading for 7 days free trial . before going to trade read term of use

Try option opstra you can live backrest 2 trades a time and it’s free and you can also try option Oracle it is also a great platform in both of the above you can paper trade