Option Prices by various factors viz: asset Current Market Price. etting exercised. ontract. n of the time to expiry, volatility of e from the current price.
Intrinsic Value & Time value Intrinsic value is the difference between th found in ITM options. OTM options have z Time Value = Option Value – Intrinsic value Time value premium decreases at an acce Currency Market Price: - 61.25 Total premium 60.50 CE 60.75 CE 61.00 CE Intrinsic Value 0.97 0.79 0.64 Time Value 0.75 0.50 0.25 0.22 0.29 0.39 Total premium Intrinsic Value 62.50 PE 60.75 PE 61.00 PE Time Value 0.18 0.25 0.35 0 0 0 0.18 0.25 0.35
e he strike price and CMP. Intrinsic value is always zero Intrinsic value e elerated rate as the option approaches maturity. E 61.25 CE 61.50 CE 61.75 CE 62.00 CE 0.47 0.40 0.31 0.23 0000 0.47 0.40 0.31 0.23 E 61.25 PE 61.50 PE 61.75 PE 62.00 PE 0.47 0.61 0.77 0.94 0 0.25 0.50 0.75 0.47 0.36 0.27 0.19
Factors influencing Currenc Parameter Call Premium Strike Price Time to maturity As strike rate increases call premium decreases Volatility Exchange Rate Call & Put options become mo it is because of Risk as the tim As volatility increases there is of the currency and hence on rate increase and that of the p As exchange rate increases ca premium also increases
cy Options Prices Put Premium As strike rate increases put premium also increases ore valuable as time to maturity increases, me increases. s high degree of uncertainty about the rate the option. The owner of the call benefits from the put benefits from the rate decreases. all As exchange rate increases put premium decreases.
Factor Affecting Options P Factors affecting Option Prices at the beginning of the expiry 10 45 Distance from the CMP 45
Price Factors affecting Option Prices near end of expiry 20 Distance 10 from CMP 70
Options Greeks The change in option price when a particular price determinant ch option Greek. For every price determinant, there is a Greek. Becau indicate the price sensitivity of option to change in price determina risk assessment and management. Some of the important options G below: Delta: It is the rate of change of option price with respect to the p underlying asset. Delta of a long call option (and/ or short put) is a ranges between 0 and 1 and for a long put (and/or short call) is a ranges between 0 and ‐1. Vega: It measures the rate of change of option value to volatility o underlying asset. It is always positive for long options (both for long call) and negative for short options (both for short put and short ca Theta: It measures the change in the value of the option with respec of time. Thus if you bought an option i.e., you are long on an option theta: all other things remaining the same, the option would lose va of time. Rho: It measures sensitivity of option value to the risk free rate.
hanges is expressed as use the Greeks ant, they are used for Greeks are given price of the always positive and always negative and of price of the g put and long all). ct to the passage n, you are short alue with passage
Currency Options Levels Type of charges Curren Exchange transaction charges 0.04% on 0.0002% (Rs 20 pe SEBI fees exercised/ GST (on brokerage/TT/SEBI fees) 1 STT /CTT not a Margin 5%-6% ( Stamp duty 0.002% (R Total on per Crore 4210 + Service tax (o
ncy Options % Wise Per/1Lac premium value 0.04 40 er crore ) on premium & /assigned value 0.0002 0.2 18% 18 5.6 applicable 0.002 2 (On sell value) Total 47.8 Rs.200 per crore) on brokerage/TT/SEBI fees)
Momentum Call: Sell MCXSX/NSE USDINR Aug Target - 61.30 (CMP : 61.44) Target 61.30 Achie Trade In Future Contract Entry Price 61.45 En Trade Qty 1 Lot Tra 1000 USD Targ 1 Lot 61.30 Target Achieved 150 In 3100 Broker Profit 5% Investment Per Lot -3.99 Net -24.55 ROI -5.40 Taxes -31.76 Brokerage(0.04%) 119.89 GST (18%) 122750 Net Exp Net profit Total TO
g between 61.44 - 61.46; SL 61.55, eved Trade in Option Contract ntry Price 61.45 At The money Opt 61.50 PE aded PE QTY 1 Lot Premium Value 0.65 1000 USD 1 Lot 61.30 61.50 PE SOLD 0.75 get Achieved 100 650 Comparison Profit 15% (When Target nvestment -2.84 -30 Achieved) ROI -5.40 Taxes * Present GST rate is 18% rage(Buy- Sell) -37.30 GST 62.70 Net Exp t profit/Loss
Precautions while using Cur Always maintain strict stop loss. Never do averaging of losing po As the option nears the expiry, th to time decay. Losses are limited in buying of o options. Always prefer to take view in op money option is better than out o
rrency Options osition. he value of the option reduces due options in comparison to selling of ption’s closer to market price (in the of the money).
Tips of successful trading Currency is pure intraday market Maintain the lot size in each trade When In Doubt Get Out Never Average a Loss The Trend Is Your Friend Never Let a Profit Turn Into a Loss If the Market Is Not Confirming You the Market Stop loss is a must Always consult your Advisor
g ur Opinion, Lose Your opinion & Listen to
THAN Reg. o International School Plot No-152-P, Sec-38, Medicity Road, Near Bakhtaw Contact no. : 0124 – 2200689, +919540008
NKYOU office : of Financial Market war Singh Chowk, Gurgaon – 122001, Haryana, India 8689, +91-7015237224, +91-8168573253
International School of Financial Markets Technical Analysis of Stock Market
Search
