Hello. Options noob here. Today I paper traded the following strategy:
-1 NIFTY 9000 PE - Rs. 129.00
-1 NIFTY 9000 CE - Rs. 132.90
Spot price at the time of initiation of trade : 9013.00
When the underlying breached 9000 from above, the premium of 9000 PE increased to 139 and at the same time, the 9000 CE decreased to 127 only.
Why did the premium of the put option increase much more as compared to the call option? Is it because the put option went in the money and thus had both intrinsic and extrinsic value or is there some other reason?
Out of the seven factors, the most important are stock price, strike price, type of option, time to expiration and volatility. Interest rates and dividends have a very minuscule effect on an option’s value.
I saw in many youtube videos, They are showing profit once premium raise. premium will raise from 9.50 to 10.50 like below example 9.50 2000= 19000 10.502000= 21000 profit 2000 in position is it right?
Puts are generally more pricey than calls because of the law of gravity
Puts are more sensitive to vega and you can see that in the injection of price momentum
joe_chris for whom you answered
I have replied to the person who started this thread- @Ronith_Sinha
[quote=“Sakshi_Poojari, post:3, topic:75449, full:true”]
I saw in many youtube videos, They are showing profit once premium raise. premium will raise from 9.50 to 10.50 like below example 9.50 2000= 19000 10.50 2000= 21000 profit 2000 in position is it right?
Yes that’s correct
Sir But some experts say If Infratel ‘May 180CE’ premiums is 9.20 *2000(lot) If the stock market above reach 180+9.20 (premium) then our gain will start. They told if premium increase 9.20 to 10.20 can not book profit. sir which one is correct?
Profit and loss is solely based upon the premium price that you had bought vs. the current price
You are at total liberty to book your 1*2000 Rupees profit
This is what all option buyers do
They exit when there’s a profit
Can you please ask them to elaborate this example?
I believe they are talking about allowing the option to expire in the money
This is incorrect
You can always book whatever profit you want
I have done scalping in stock options, for as low as 20 paisa movement.
The profit begins as soon as the option price is higher than your price at which you bought
Yes Joe Chris sir I saw most trader doing same and also i seen in live trading. i think some people confusing me simply. you are telling right sir. Sir it for delivery and Intraday same?
Joe Chris Sir if Infratel MAY 180CE now premium is 9.20 and CMP infratel is 173. If infratel move towards 173 to 174, premium price also hike right? in this way if premium hike 9.20 to 10.20 may i book profit in Intraday and Delivery also right Sir?
Same answer i told a expert he says im not telling his name here but he said ,
Once the price of infratel goes to above 189.40 you will start to earn profit -say if price goes to 194 your profit will be 4.6*2000=9200
When you buy a call option, the option will increase if the underlying stock increases in value
If you are playing with options, your main watch list should be the strike that you have traded… 180 ce
And also the stock
Prices move based on speed, days to expiry and the gamma factor
Just to make it simple, if you buy tomatoes at 9, and some one is willing to buy it from you for 10, nothing stops you from selling at a profit
The only thing that can stop you is your deep analysis that says that tomato can go upto 15 by the next week and it is not worth selling for 1 rupee gain
Assume you bought a call option at 9, for 180 ce.
Stock ended at 181
You did not book your profit before the expiry day ended.
Only in such a case, your cost of 9 rupees has translated into 1 rupee because at expiry end, stock and futures price converge.
Only in such cases, do you stand to make a loss
Yes, he is partially correct
That’s if you allow your call option to expire.
That means you did not sell off your position before the last Thursday end of day.
This is usually risky as people like you and I, are speculating and we don’t want our options to get exercised
Joe Chris …Sir Thanks for all reply
Where i get right education about option market like is there any youtube video and website please share with me. always i can not ask query experts . any way big thank for you sir
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