Why is the Derivative not moving proportionate to underlying

[MohammedFaisal]

@Gangula

I’m tracking Nifty 50 and its derivate Nifty 21800 CE 15-Feb-24 on 14-Feb-24.
I’m noticing that the derivative is not moving in direct proportion to Underlying. I read that there are more factors than just the movement in underlying.

The price of Nifty 21800 CE not moving in direct proportion to the Nifty 50 index can be attributed mainly to time decay and Implied Volatility (IV):

• Time Decay: As the option approaches its expiry (15-Feb-24), its value can decrease even if the Nifty 50 goes up, due to the reduced time for the option to end in the money.
• Implied Volatility (IV): Changes in market expectations of volatility can affect the option’s price. A decrease in IV can offset gains from an increase in the underlying index.