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| Discuss Option Pricing at the Derivatives within the Traderji.com - Discussion forum for Stocks Commodities & Forex; I didn't see a thread for option pricing. Does anyone actually price options or are ... |
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| Derivatives Discuss Futures & Options in securities whose value is derived from an underlying instrument. |
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#1
13th August 2007, 02:33 PM
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Option Pricing
I didn't see a thread for option pricing. Does anyone actually price options or are you just guessing? I use the option calculator at my website to help me decide even though I know the market maker will never give it to me at fair value. Take a look at the calculator and if you have any question about it then this is the thread to ask. http://www.asia-etrading.com/tools/o...calculator.php 
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#3
3rd September 2007, 08:10 PM
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Re: Option Pricing
It really depends on the exchange. Some exchanges appoint a market maker and some exchanges allow qualified individuals to make the market. These are both traders per se but as an exchange qualified market maker are bound by market making rules. Of course option start trading after the underly asset has begun trading. The pricing then starts from there.
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#4
3rd September 2007, 08:43 PM
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Re: Option Pricing
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#5
3rd September 2007, 08:45 PM
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Re: Option Pricing
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As of now the pricing of Options in India have no parity at all with the levels generated by Black and Scholl model or any other form of Greeks based calculations.
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#6
5th September 2007, 08:57 PM
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Re: Option Pricing
well, I also trade options and also novice. I use ICICI's option pricing calc just to see what it says.
But I guess they are definitely in line with any of the pricing model one can use with reasoning. Especially the nifty options are probably ideally priced. (in my opinion, fund houses, FIIs and HNIs all use only futures and options to hegde their position or to enter into a stock slowly.) They are just like stocks, isnt it. No matter how much I hate RIL, that will remain as the top stock because many others like it. Similarly what you think as the appropriate volatality factor may not be the same as what others think. I usually check both put and call at same distance to see whether the market has a upward or downward bias. (ICIC calc helps one to compute volatality based on current price. Now a days put's volatality is higher than call's for nifty). Usually the bias is always towards where the discount/premium of the undelying, but much higher bias. It suggests me that "big guys" use options more than a trader.
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