Sure. Let's just take the case of DELTA and it's effect on option price.
To begin with, delta is nothing but determining the numerical premium value of an option with respect to movement in the particular scrip. Let's just keep the rules simple:
-- If the DELTA reaches around 75 to 85 to 100. That particular option contract will start behaving like FUTURES contract with respect to movement in scrip. This happens mainly in the case of bigger ITM options only. That is why ITM options move so fast and are in complete sync with the price movement of a particular scrip.
-- Far and distant OTM options will always have very less DELTA value. Obviously, their value will change less with respect to change in price of scrip. That is why OTM options in banknifty are like gambling and lottery. If you go right, you may win big. But if you go wrong, you may lose complete premium. I never prefer such kind of trading. A responsible trader should not indulge in gambling kind of trading. Most of the times, OTM options end in big ZERO. They are usually the bread and butter of option writers or option sellers. Thanks
Disclaimer: This forum is meant for educational purposes only.
To begin with, delta is nothing but determining the numerical premium value of an option with respect to movement in the particular scrip. Let's just keep the rules simple:
-- If the DELTA reaches around 75 to 85 to 100. That particular option contract will start behaving like FUTURES contract with respect to movement in scrip. This happens mainly in the case of bigger ITM options only. That is why ITM options move so fast and are in complete sync with the price movement of a particular scrip.
-- Far and distant OTM options will always have very less DELTA value. Obviously, their value will change less with respect to change in price of scrip. That is why OTM options in banknifty are like gambling and lottery. If you go right, you may win big. But if you go wrong, you may lose complete premium. I never prefer such kind of trading. A responsible trader should not indulge in gambling kind of trading. Most of the times, OTM options end in big ZERO. They are usually the bread and butter of option writers or option sellers. Thanks
Disclaimer: This forum is meant for educational purposes only.