Factors Affecting Option Prices
Option premiums are influenced by multiple factors:
Underlying Price: Moves directly impact intrinsic value.
Time to Expiry: Longer duration = higher premium (more time value).
Volatility: Higher volatility = higher premium (more uncertainty).
Interest Rates & Dividends: Minor factors but can influence pricing.
The famous Black-Scholes Model is often used to calculate theoretical option prices.
Basic Option Strategies for Beginners
Here are some simple strategies you can start with:
1. Buying Calls
Use when you expect the stock/index to rise.
Risk: Premium loss.
Reward: Unlimited upside.
2. Buying Puts
Use when you expect the stock/index to fall.
Risk: Premium loss.
Reward: Significant downside profits.
3. Covered Call
Own a stock + Sell a call option on it.
Generates income but caps upside.
4. Protective Put
Buy stock + Buy a put option.
Acts like insurance for your stock portfolio.
5. Straddle (Advanced Beginner)
Buy a call and put with the same strike and expiry.
Profits from big moves in either direction.
Risk: Both premiums lost if market stays flat.
Option premiums are influenced by multiple factors:
Underlying Price: Moves directly impact intrinsic value.
Time to Expiry: Longer duration = higher premium (more time value).
Volatility: Higher volatility = higher premium (more uncertainty).
Interest Rates & Dividends: Minor factors but can influence pricing.
The famous Black-Scholes Model is often used to calculate theoretical option prices.
Basic Option Strategies for Beginners
Here are some simple strategies you can start with:
1. Buying Calls
Use when you expect the stock/index to rise.
Risk: Premium loss.
Reward: Unlimited upside.
2. Buying Puts
Use when you expect the stock/index to fall.
Risk: Premium loss.
Reward: Significant downside profits.
3. Covered Call
Own a stock + Sell a call option on it.
Generates income but caps upside.
4. Protective Put
Buy stock + Buy a put option.
Acts like insurance for your stock portfolio.
5. Straddle (Advanced Beginner)
Buy a call and put with the same strike and expiry.
Profits from big moves in either direction.
Risk: Both premiums lost if market stays flat.
Hello Everyone! 👋
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Hello Everyone! 👋
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.