The Risks for an Option Writer..

The risk of an Options Writer is unlimited whereas his / her gains are limited to the Premiums earned. When an uncovered call is exercised for physical delivery, the call writer will have to purchase the underlying asset & his / her loss will be the excess of the purchas…

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Once have bought an option and paid the premium for it, how does it get settled ?

Option is a contract, which has a market value like any other tradable commodity. Once an option is bought there are following alternatives that an option holder has: You can sell an option of the same series as the one you had bought and close out / or square off your posit…

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Why should invest in Options? What do options offer ?

Besides offering flexibility to the buyer in the form of right to buy or / sell, the major advantage of options is their versatility. They can be as conservative or  / as speculative as one's investment strategy dictates. Some of the benefits of Options are as under: ·…

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Major players in the Options Market..

The Major players in the Options Market ? Developmental institutions, Mutual Funds, Domestic and Foreign Institutional Investors are the likely major players in the Options Market. Also share Brokers, Retail participants are the likely  players in the Options Market.

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Explain the Option Greeks.. ?

The price of an Option depends on certain factors like price and volatility of the underlying, time to expiry etc. The option Greeks are the tools that measure the sensitivity of the option price to the above-mentioned factors. They are often used by professional traders for…

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Options Trading: Time Value With Reference ..

Time value is the amount option buyers are willing to pay for the possibility that the option may become profitable prior to expiration due to favorable change in the price of the underlying. An option loses its time value as its expiration date nears. At expiration an opti…

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How to Decides on the Premium Paid on Options Trading ?

How to Decides on the Premium Paid on Options Trading. How is it Calculated ? Options Premium is not fixed by the Stock Exchange. The fair value / or   theoretical price of an option can be known with the help of pricing models and  then depending on market conditions the pr…

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The Factors that Affect the Value of An Option premium..

There are 2 types of factors that affect the value of the option premium: They are Quantifiable Factors and Non Quantifiable Factors.. Quantifiable Factors..  * Underlying stock price  * The strike price of the option * The time to expiration and * The volatility of the underlying s…

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NSE, MCX-SX get Approval For Interest Rate Futures

The Securities and Exchange Board of India (SEBI) has permitted NSE and MCX-SX to launch interest rate futures. NSE will launch trading in this instrument on January 21, 2014 while MCX-SX will commence trading within this month. Both the exchanges will launch the product …

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Different Pricing Models for Options..

The theoretical option pricing models are used by option traders for calculating the fair value of an option on the basis of the earlier mentioned (Quantifiable Factors and Non Quantifiable Factors) influencing factors. The 2 most popular option pricing models are.. 1. Bla…

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Call and Put Option Trading: What is the Intrinsic Value ?

The intrinsic value of an option trading is defined as the amount, by which an option is in - the-money, or / the immediate exercise value of the option when the underlying position is marked - to - market. (mtm) For a call option.. Intrinsic Value = Spot Price - Strike Pri…

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Call Option : What are Naked Calls ?

Covered calls are far less risky than naked calls (where there is no opposite position in the underlying), since the worst that can happen is that the investor / trader is required to sell stocks already owned at below their market value. When a physical delivery uncovered …

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Call Option : What are Covered Calls ?

A call option position that is covered by an opposite position in the underlying instrument (for example shares, Index, commodities etc),is called a covered call. Writing covered calls involves writing call options when the stocks that might have to be delivered (if option…

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“Tri-Series” Training and Development Programme on Financial Derivatives..!

"Tri-Series" Training and Development Programme on Financial Derivatives -     Leve 0 - on 9 and 10 March 2013,  Level 1  - on 6 and 7 March 2013 Level 3 - on 27 and 28 April 2013 The programme organised by PSG Institute of Management For more details http://psgim.ac.in…

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Futures and Options : Shares, Symbols and Lot Size shares..!

Futures and Options : Shares, Symbols and Lot Size shares..! UNDERLYING                  SYMBOL    Lot -Shares as on Jan-2013 CNX BANK INDEX                      BANKNIFTY 25 CNX INFRASTRUCTURE INDEX            CNXINFRA  100 CNX IT                              CNXIT     50 CN…

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