As depicted in above image , it compares how variations in NIFTY INDEX shifts the pattern in a At the Money (ATM) Strike option on a Expiry day. It may be noticed the Index closes for the day at am earlier level whereas the option premiums are down by a significant margin.
It may be noticed,
- Price Levels at two or more options were same in Index
- But in the options chart when its nearing expiry the variations are less inline causing a drop in the premium which is the Thetha factor playing its role with decrease in time.
- This may result in approx 20% to 30% reduction in option premium prices - Rate of decline in downtrend option direction is faster than uptrend incline.
Below chart of same strike price option for a upcoming week expiry , shows a minimal variation compared to expiry day variation premium price value i.e upto 60%
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