Why are Nifty Options Price So High

#1
I am an amateur options trader doing Monthly Options trading on Nifty Index options. I have observed that ever since the volatility surge in the markets during the October 2018, the Nifty Index option prices have shot up heavily as shown below and have remained at that level.
How do you explain this kind of surge in option premium ? Are the markets prepping for 2019 elections?

Example:
2018 May 2nd
Index Close 10718.
Days to expiry - 29
NIFTY MAY 31 2018 10700 CE PRICE 160
NIFTY MAY 31 2018 10700 PE PRICE 120
2019 January 1
Index Close 10910
Days to Expiry - 30
NIFTY JAN 31 2019 10900 CE PRICE 210
NIFTY JAN 31 2019 10900 PE PRICE 150
 
#2
I am an amateur options trader doing Monthly Options trading on Nifty Index options. I have observed that ever since the volatility surge in the markets during the October 2018, the Nifty Index option prices have shot up heavily as shown below and have remained at that level.
How do you explain this kind of surge in option premium ? Are the markets prepping for 2019 elections?

Example:
2018 May 2nd
Index Close 10718.
Days to expiry - 29
NIFTY MAY 31 2018 10700 CE PRICE 160
NIFTY MAY 31 2018 10700 PE PRICE 120
2019 January 1
Index Close 10910
Days to Expiry - 30
NIFTY JAN 31 2019 10900 CE PRICE 210
NIFTY JAN 31 2019 10900 PE PRICE 150
Check vix value on both times
 

iwillwin

Well-Known Member
#6
I expected little more wisdom from a "Well-Known Member"
Well I don't know how come this thing is attached to me, there are many great memories out there well known on traderji....
For your query I think during events around premium are high ... results season is around the corner, budget will come, Geo political risks, brexit decision, election etc....
I am not an option trader as a disclosure
 

pannet1

Well-Known Member
#7
the options premium is theoretically priced depending on the no of days to expiry. so you have several values depending on the that
the time value is dependent on the supply demand just like other instruments.
buyers think that they are going to earn on top of the premium they paid.
sellers think that they have sold on top of the volatility and time decay will help them in keeping the premium they received.

thats all it is to it.
 
#8
Days to expiry for this month is more compared to other months (31st). Also market has down or choppy for the last few months. This increases the IV (Implied Volatility). So time value (theta) and greater IV (vega) are contributing to higher option prices.
 
#9
If you are an amateur suggest you read up to add information for yourself, try the NSE options information and both lessons of zerodha on options, this will give you a basic foundation for options - do not pay any money for courses!
 

OneThatGotAway

Well-Known Member
#10
if you are new play option on paper for 1 st month
if u win play it for 2nd month on paper .
you get to play option only when u win consistently for 4 month on paper trading.

and option price are so high coz seller of option is taking risk. he want s to eat max premiums.
don;t fall for it .
 

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