Dear Sunny,
Current months expiry is next week so Oct options will loose its premium and so 5100 calls as there is less chances of Nifty to cross 5100 level strongly by monthend.
Time decay is a crucial component traders consider when deciding when/where to buy or sell options. Time decay (Extrinsic Value ) is represented by Theta. Lets not go into these Greeks. An options time to maturity (or time to expiration) has a huge impact on the price of the option. That is, as the option moves closer to expiry (i.e. running out of time) its chances of becoming more profitable decrease with every passing day. As you can probably imagine, predicting an approximate stock price becomes easier every day. For example, you will have a much greater chance of predicting tomorrows closing price of Reliance Industries or Bharti or stock that you closely track than you will of predicting next Fridays closing price.
Because of this, the Time Value of an option decreases exponentially as the maturity date approaches - especially as the time to maturity passes near last Thrusday of current month. For OTM options this is key, as the entire option is made up of Extrinsic Value.
We buy an OTM only when we believe that there is very strong chance of OTM to become in-money.
A vechile runs faster when running on a platform having less friction coefficient and when friction increases ie. running on sand for example, its speed decreases. You can compare this friction with time decay for options.
This friction is max. near expiry so its reco. not to buy an option after 20th of the current month.
Will suggest you to use a option calculator to calculate your risks-reward ratio before taking a decision for trade and be a regular visitor to nseindia->option-chain segment to see whats happening in options space.
Download options data for Nifty or the stock of your choice for the last 3 month of 3-4 strike prices. (One AT money or near money,one OTM, one ITM)
to see and understand the movement. Also keep the corresponding chart for the month side by side to understand its movement vis `a vis corresponding options strike price movement. You can also add/modify some indicators to see its effectiveness etc.
Being a self learner I followed the above myself and have found it useful.
Hope above helps.
Regards
