Part 2 Ride The Big Moves

Option Premium & Pricing (The Greeks Simplified)

Premium depends on:

Intrinsic Value = difference between spot & strike.

Time Value = extra value based on time to expiry & volatility.

The Greeks explain sensitivity of option price:

Delta: Sensitivity to underlying price.

Theta: Time decay (options lose value as expiry nears).

Vega: Sensitivity to volatility.

Gamma: Rate of change of Delta.

For example, Indian traders often notice how Bank Nifty weekly options lose value rapidly on expiry day (Theta decay)—which is why option sellers make money on “expiry day trading.”

Types of Options in India

Index Options – Nifty 50, Bank Nifty, FinNifty (most liquid).

Stock Options – Individual companies like Reliance, TCS, HDFC Bank.

Currency Options – USD/INR, EUR/INR (for forex hedging).