Hello Everyone,
I am new to options.
I hedged Asianapaints via May3400PE buy when the spot price should be 300 (I am not sure).
Now it’s showing My premium loss is approx (404.7-320)=80-85 per share.
however, my share only rose approx 70-75 per share now.
So why did it happen?I thought I was headed completely.
Also, should I give delivery on 26 expiry May or sell Put? it seems if I give shares delivery it would be more profitable.
Please suggest.
Thank you,
AK
Can anybody suggest on above?
Options don’t move linearly with spot, and there’s time decay too. If you buy a put and don’t square-off, then you will have to give delivery on expiry. You should know there are some charges (0.25% brokerage) associated with such deliveries.
Thank you for your reply,VIj!
So, it means I need to calculate both situations 1. Option square off and 2. Give delivery (Charges & all ) and choose the best option.
I have heard people square off position so that’s why I am in doubt.