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| Discuss Futures Or Options ? at the Derivatives within the Traderji.com - Discussion forum for Stocks Commodities & Forex; Can any one tell me the difference between Squaring off an option, excercising the option, ... |
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#52
2nd September 2008, 06:44 PM
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Re: Futures Or Options ?
Quote:
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#54
18th September 2008, 02:04 PM
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Re: Futures Or Options ?
I had a question about Options strike price.
Suppose Nifty is trading at 4000. Calls for Nifty at strike price 4100 are available at (say) 150 and calls for Nifty at strike price 4300 are available at (say) 25. So, basically, if I buy: - Calls for strike price 4100, total premium I pay = 150*50 = Rs. 7,500 - Calls for strike price 4300, total premium I pay = 25*50 = Rs. 1,250 Now, if Nifty increases to 4050, I am assuming that if the premium for 4300 strike price becomes 25+x, the premium for 4100 strike price will become 25+x+y. Is this correct? Otherwise, why would anyone want to go with 4100 strike price (and pay a larger premium, if the premium appreciation is also not larger, than it would be for 4300 strike price). I understand premium pricing is derived from BS formula, which I find difficult to use (especially the volatility part). Thanks Bharosey.
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#55
20th September 2008, 10:40 AM
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Re: Futures Or Options ?
Quote:
In your above example,the premium for 4100 calls will become 150+x+y as it will go up faster than premium on 4300 calls(deep out of money !!!) Regarding BS formula nobody understands it except Mr Black and Mr Scholes  ,so dont worry it is not required to trade options.If you want to do PhD in options the you will have to learn it and my sympathy with you So have bharosa on Ram and your system and trade "smartly" !!! Please take all the fun in light spirit !!! Best Wishes friend,Trade well !!! Smart_trade
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excepting a few top counters that is.
