Please explain this options behaviour.

[Tukaram]

i also options studiy answer pilij my questioning

 

[ram2010]

I understood what you said here. Thank you.
Basically how I plan to profit is, by looking at EQ prices, invest in options by selecting the appropriate strike price. No plans of carrying thru expiry. Simple buy low sell high.No hedging.

That is why i go for itm options with enough liquidity-

suppose nifty at 9200- i will go for 9000 or even 8900 ce-

same for good liquid stock options-

no need to care about theta etc-\\atm and otm options will not exactly follow the underlying-

they were meant for selling-

 

[Subhadip]

Note: Basically how I plan to profit is, by looking at EQ prices, invest in options by selecting the appropriate strike price. No plans of carrying thru expiry. Simple buy low sell high.No hedging.

I was watching charts of MRF, both OPTIONS(60k CE and 57K CE strike price) and EQ. If EQ price rises, so does premiums. Last two days of trading...the EQ price rose, so did 57k CE(charts correlated well). But 60K CE chart did not correlate with EQ at all! So my question is why did it not correlate with EQ prices ?

In the case of ACC, as EQ price declined, so did all the option premiums across all strike prices.The charts of EQ and Options premiums correlated well in ACC (and NMDC too), but in the case of MRF it did not.


Some more questions:
Is theta decay high at 60k compared to 57k ? The EQ price was closer to 60K.
Or was it liquidity issues that forced 60K to not correlate with EQ charts?

If I had invested money in the last 2 days it would have been in 60k CE, expecting better premium rise than 57k, and I would have lost money even if the EQ price rose. I am talking about simple buy low sell high, not any complex strategies. I hope I was clear in my explanation.

Trade deep in the money option buying to negate theta effect

 

[Tukaram]

at the money is powerful Subhadip