Options Premium Analysis involves assessing the factors that determine the price of options contracts. There are six key elements that influence the premium:
On the TalkOptions website, traders can perform calculations to estimate the projected
premium of options based on IV or the premium itself. Here's a live example using both calculation methods:
Premium Calculation Method : Suppose a trader bought a Call option with a strike price of 18700 for Nifty at a premium of 80 rupees, expiring on 29th June 2023. By adjusting sliders for the underlying price, IV, and expiry date, the website provides the projected option price on the expiry day, revealing the potential outcome of the trade.
IV Calculation Method : For another example, let's say a trader purchased a Put option with a strike price of 18800 for Nifty at a premium of 136 rupees, expiring on 29th June 2023. By sliding the premium and the expiry date, the website computes the implied volatility (IV) and other Greek values for the option, providing insight into future price expectations.
The tool allows traders to explore future projected premiums and IVs. For those seeking the option price for their chosen strike price, the premium calculation method is appropriate. Conversely, for those interested in future IV and delta values, the IV calculation method provides valuable information. The website covers projected premiums for both index and stock options, along with future IV and delta values. Traders can leverage these tools to make more informed decisions and gain insights into potential outcomes for their options trades.