Change in Options premium

#1
Why change in options premium is important? What's the importance? And what's the effect of change in options greeks is important?
If your outlook on underlying is right then you can just execute an options trade with less capital. And maybe short an option and keep the premium. In all of this, why options greeks and change in premium is important?
 
#2
Greeks give you sensitivity of the Price, to the model inputs ( Underlying, Strike, Time, Volatility )

you need to understand the model first
then understand/have a sense of the Greeks

a High Theta will be a sitting duck => you should short it and pocket the premium
a High Rho will be bit risky => try to be directionless
similarly, develop intuition for Greeks - and trade accordingly.. cos in real life, you will encounter combination of situation.. i.e you NOT ONLY get direction right, but the timing of Option trade as well..

for ex: todays NIFTY option premium 23rd Expiry IV is ~100% that is ridiculously high compared to 10% on an avg IV everyday..
it is market telling you.. that it is positioning for volatile moves on either side..

i short NIFTY 23MAY 12000 CE at 129, couple of days back.. see the upside is limited but the market has higher downside risk..
 

PUCHU_2500

Well-Known Member
#3
I wanted to buy 12000 calls hoping BJP is going to secure majority, but in all strike prices premiums are too high and expensive, so I do not think it is worth to buy calls in near expiry or monthly expiry as per my understanding. Though I have poor knowledge in option and I hardly trade it.....I am able to control myself not to be in this high risky ventures.......
 
#4
if u r smart trader.. u can play 23rd May+30th May as a strategy..
i do think BJp gets majority, but upside cant be so high to cross 12129 ( my BE ) so i went in naked..

i got chance for 2 days, to book profits.. but i am willing to see how market plays out.. if things get ugly will cover @150..lets see..
 
#5
Closed this position, @95, i still dont believe NIFTY will cross 12000 today - cos NDA majority is priced in.
But the channel folks are talking about circuits, 12500 n all.. so y take the risk..

will be on sidelines and watch results now..:)
 

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