Path to Consistency

[mohan.sic]

U have to learn a lot my dear friend in option.

thats all right bro. I agree to what you said.

why don't you point out a mistake with reasoning in what i said.

 

[mohan.sic]

Correct me if I am wrong, underlying value in nifty options is that of Nifty Spot, not nifty futures.

sorry.. am not clear on your question.

 

[varunkochhar]

Mohan ji in options the underlying is spot not futures. Take the case of Bank Nifty which has weekly expiry though we have one future for the whole month. On Thursday at 3:30 PM the options are settled on the basis of spot prices not on future prices. Meaning if spot is 21380 then 21300 strike price CE is settled at Rs.80 though the BN future maybe say 21460.

 

[mohan.sic]

Mohan ji in options the underlying is spot not futures. Take the case of Bank Nifty which has weekly expiry though we have one future for the whole month. On Thursday at 3:30 PM the options are settled on the basis of spot prices not on future prices. Meaning if spot is 21380 then 21300 strike price CE is settled at Rs.80 though the BN future maybe say 21460.

what i said was neither about BN nor expiry.

It was about 9200 nifty pe case as given by our dear friend . You may ask me on that.

 

[varunkochhar]

Mohan ji please correct your facts, all options are based on spot prices, never on future prices. That is it !!!!!

 

[varunkochhar]

fyi, option prices are valued based on Futures price. Not spot Nifty.

So 9200 pe trading at 84 means : 70 points intrinsic value ( strike 9200 - future 9130 ) and 14 points time value.

If what you are saying is to be considered, every time when Nifty is trading at premium - All puts will have False premium AND every time when Nifty is trading at discount - All calls are at False premium.

This is where you were wrong which i felt like correcting by giving an analogy. If you still have this "I Know it all" attitude then i am sorry to hurt you.

 

[mohan.sic]

This is where you were wrong which i felt like correcting by giving an analogy. If you still have this "I Know it all" attitude then i am sorry to hurt you.

I just said options will trade based on future price. I may be right or wrong.

Where is the point of attitude here.

On the other hand You too just said that it depends on spot prices. Does it mean that its your "I Know it all" attitude

 

[varunkochhar]

Sorry sir i take back my comment. You feel free to treat Options to be based on futures. I know for a fact that they are based on spot prices. 3 people tried to reason out with you but you seemed adamant. No more comments from my side. Sorry once again. The reason i chose to correct you was that you had use fyi in your message to Subhadip ji. Meaning that you knew it all and were correcting him. You were not using the word "i Think"

 

[VJAY]

I just said options will trade based on future price. I may be right or wrong.

Where is the point of attitude here.

On the other hand You too just said that it depends on spot prices. Does it mean that its your "I Know it all" attitude

all options are based on spot ...Its fact !!!!!!!!!!!!

 

[Subhadip]

I have told many times that do not sell PE when VIX is down.

Now just a small example why I am saying this.

Just on Thursday, market Spot at 9100, but 9200 PE at 84...as NF was at 9130 around.

Hope all are understanding what i am saying.

Nifty spot at 9100 so 9200 PE should be at 100, rather it is following NF which at 9130..so it should be as per NF at 70. But with some premium it is at 84.

So as per NF it is premium of 14 points,

Say u shorted 9200 PE seeing the false premium of 14 points.

But actually it should be 100...so it was in discount if you see the nifty spot.

NF will reduce to NS at expiry..

SO though i have bought Nifty Mar 9200 PE, though I am not loosing any premium, rather i am gaining premium.

There is false Theta value if u see any option software, rather selling PE, here buying is getting theta..

Hope I am communicating what I want to say to all..

Option price settled seeing spot price. But in real time it follows future price.

What I have told is always there are fallacies in price.

So we have to utilise the fallacies.