Does time value increase anytime?

Dear Gurus,

I have been trying to find this thing for a long time but haven't been able to reach a conclusion. I want to know if the time value of an option increase as time passes? I know it decreases but i want to know what circumstances can cause a time value to increase?

Eg. I am taking a simple example where there are only intrinsic and extrinsic(time) values for the given options. Nifty is trading at 6100 and 6000 call is 150(100 intrinsic and 50 time value) while 6200 put is 105(100 intrinsic and 5 time value), there is a bullish anticipation but all of a sudden there is bad news and nifty moves to 5900, under these circumstances if the time that was constant will introduce a 'more' time value on the 6200 put?

Thanks for the comments.

when VIX spikes up, i've seen time value inflate to almost double.

But VIX spikes are only possible under extreme circumstances. Correct me if I am wrong? This can happen only under a very volatile market.

If any event is announced which has uncertain outcome and if it is an event which can swing the underlying too much, the implied volatility increases increasing option premiums....A very famous speculator and a large hedge fund manager in US went bankrupt because of this . Implied volatility increased thereby increasing the premiums of the options in which he was short....

Smart_trade

Hey ST

Just curious to know which hedge fund are you talking about ?

Cheers

These are sensitive issues , so would not like to name or ellaborate further....

Smart_trade

Placebo

Do not worry who it was. This hedge fund manager made a mistake by not knowing how to reduce and control his risk or even implement his way of trading in the right way.

As told in the past: Many which have big amounts to trade with are some times not able even to know in reality what they did or do. They not care as it is not there money and so why care about anything . They only care about there AGIO of what ever. That is the money machine and not any performance. AGIO is the free money for not giving any guarantee and doing nothingt for any % may made in the future. Posted that in the past and hope every body get it the second time.

Just gambling on the accounts and of the back of the customers.

Not all do that and to find out who does or not is nearly impossible for the 95% which stands out of the door. Bad news and the way it is day by day.

What about a thread which brings together all the criteria which are needed to find and get an idea about how any hedge fund does a good work or not?

Good trading

DanPickUp

So its possible only under certain circumstances which might not give an idea of the outcome. Say for eg. if a news of a war with our neighbor starts and everyone feels the market will tank and currently market is at 6000 so can we expect an 6000 put to have same time value as a 5900 or 5800 put? Sorry for asking too much but my future strategy depends on finding a ratio which can help me in making spreads...

"Time value" of an Option cannot increase as "time passes" if all other factors remain constant.

Thanks man, even my study was saying the same but wanted to make sure before I start investing big again.