option trading in nifty

D

deepnetin

New Member
#1
#1
i m new to option trading. i hv a query may be a silly one but i hope members at TJ will answer me.
suppose i hd bought November nifty 5000 put 1lot @ 7.00 (nifty was at 5120 at the time of buying) but market moves up and my value of put comes down to 5.00. since it is a long put it will continue to move down due to time decay if market remains above.
my question is if due to time decay my put value is suppose 1.00 on the expiry day but it strikes the 5000 level, i will gain or loose?
 
R

rkkarnani

Well-Known Member
#2
#2
deepnetin said:
i m new to option trading. i hv a query may be a silly one but i hope members at TJ will answer me.
suppose i hd bought November nifty 5000 put 1lot @ 7.00 (nifty was at 5120 at the time of buying) but market moves up and my value of put comes down to 5.00. since it is a long put it will continue to move down due to time decay if market remains above.
my question is if due to time decay my put value is suppose 1.00 on the expiry day but it strikes the 5000 level, i will gain or loose?
Click to expand...
As Nifty nears 5000 level on Derivative closing day you may get a profit as the Put will surely move above Rs.7/- However if you wish to find out what happens if you allow the Put to expire without squaring it and Nifty closes at 5000/- In such a scenario you loose the premium you paid for it : Rs.7/-.
 
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