Jagmohan Singh
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understanding options further

Jagmohan Singh at 10:14 AM - Dec 09, 2013 ( ) Views: 777

1

astonishing observation

this morning nifty opens 100 points gap up.

a 160rupee put becomes 80 approx (fall of 50%)

whereas a 160rupee call goes up by a meagre 35points (just 20% instead of 100% rise which is reverse equivalent of 50% fall of put)

shocking, at the surface of it.

but, what does it mean?

does it mean

- that the call was very costly (super premium) which has just come down to realistic levels?

- does it mean that operators are bullish and going to take the market higher.

- they will eat put premiums big way and give nothing to the call buyers? eventually eating their premiums also as they reach sufficiently high?

- does it mean that if a pro trader was to guess the direction of the market rise, than selling/writing puts and calls of the boundaries of the estimated range can be a safe and lucrative bet?

 


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Ben Benhar at 11:03 AM - Dec 09, 2013 ( )

Seems the big players were in option writing...... see now as per CMP options buyers are the one who lost, BUT, option writers are still in profit....!!!!!!

Badri Ns at 10:57 AM - Dec 09, 2013 ( )

sirji,

yes, I too agree and me 2 trying to understand the behaviour

we need to trace the hidden foot print of the big players and its not easy also

Jagmohan Singh at 10:53 AM - Dec 09, 2013 ( )

no, no

there is a big difference in the put and call behaviour here and therein lies the clue. the relative difference.

Chintan Savla at 10:49 AM - Dec 09, 2013 ( )

In my view it just means that the VIX on friday was high,making options costlier and as Nifty opened postive today,VIX dipped , making options cheap...

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