In this article we analyze how stock option premium value gets appreciated or depreciated over a long weekend of 3 days .
Option : NIFTY 50 , No Drastic change in Index when re-opened after weekend
Option chain table for Friday market closure hours
Option chain table after 3 days weekend - Tuesday morning start of market - no drastic events
Analysis
Call Options (CE)
- At the money (ATM) calls - 0% change - Neutral - no loss , no profit
- In the money (ITM) calls - Profits - Average 4% to 5% (BUY)
- Deep ITM calls - Profits - Average 2% to 1% (BUY)
- Out of Money (OTM) calls - Loss - Average 10% to 15% (SELL)
- Deep OTM call - Loss - Average - 20% to 40% (SELL)
Put Options (PE)
- At the money (ATM) calls - Loss - 12% change (SELL)
- In the money (ITM) calls - Loss - Average 10% to 5% (SELL)
- Deep ITM calls - Profits - Average 2% to 1% (BUY)
- Out of Money (OTM) calls - Loss - Average 13% to 20% (SELL)
- Deep OTM call - Loss - Average - 20% to 40% (SELL)
Analysis Summary and trade tips before the weekend starts
- BUY ITM CE for minimal profits
- SELL OTM , Deep OTM CE for good profits
- SELL OTM; Deep OTM PE for very good profits
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Image courtesy : SensiBull