How Option Prices Change With Stock Price And Strike Price

Podcast Duration: 04:51
नमस्कार मित्रो। एंजेल ब्रोकिंग के इस podcast में आपका स्वागत है ।

What are options? Options are simply a financial derivative that let you invest in different commodities, stocks and currencies. Agar aap ek options contract khareed te hai, then wo contract aapko option se linked asset purchase ya sell karne ka right deta hai. This right is not indefinite - iss right ka ek definite end point hota hai, jisse expiry date kehte hai.

Before jumping to options prices, let’s talk about why you should care about options. To keep it simple, options contracts let you widen your investment opportunities. Keeping a diverse portfolio is very important while trading in the financial market. Agar aap apne poore investments ek hi company, ya phir ek hi sector, mein lagate hai, toh aap zaroorat se zyada risk utha rahe hai. Jitna aap apne portfolio ko diverse banayenge, utna aapko sector-specific shocks se immunity milega. Options contracts ke through aap crude oil aur gold jaisi commodities, aur dollar ya phir yen jaise currencies, mein trade kar sakte. Aapko inn commodities aur currencies ka physical ownership nahi lena hoga - this is where the magic of financial derivatives comes in. You can just buy an options contract - and then you can start trading the underlying asset

Aapko market mein do prakar ke options milenge - call options, and put options. Call options are bought when the trader expects the price of the underlying commodity to rise. Put options are bought when the trader expects the price of the underlying commodity to fall.

To acquire an options contract, you pay a premium for it. The premium is also known as the options price. The premium for a call option and the premium for a put option are differently calculated. Before we move on to these two different calculations, one point should be repeated: aap koi bhi asset par call option tab khareedoge jab uss asset par aapka outlook bullish hai - that is, you expect the asset to gain value before the contract expires. In the opposite vein, you will buy a put option on an asset when your outlook is bearish - that is, you expect the asset to lose value before the contract expires.

The premium paid for every options contract is a simple addition of the intrinsic value and the extrinsic value of that contract.

However, call options aur put options ka intrinsic value opposite tareeke se calcualte kiya jaata hai.

When you take the current market price of an asset and subtract its strike price, you get the intrinsic value of the call option for that asset. But when you turn the equation on its head - that is, when you subtract the current market price from the asset’s strike price, you get the intrinsic value of the put option. Confused? Let’s understand this in more detail.

The strike price is at the price at which you can sell or buy the options contract before it expires. A call option gives you the right to buy, while a put option gives you the right to sell. So far, so simple. Now let’s imagine you buy a call options contract for crude oil jiska strike price 4000 hai. Ye bhi maan lijiye ki crude oil is currently trading at 5000. Now, the intrinsic value of this contract will be the market price minus the strike price. That is, 5000 - 4000 = 1000.

Now suppose the market price of crude oil increases to 5500. According to your options contract, aap crude oil ko 4000 mein khareed sakte hai. So now you can buy crude oil at 4000, and sell it at 5500. You will cover the intrinsic part of the premium that was 1000. In addition, you will have 500 left. Ab yaad kariye ki options price intrinsic aur extrinsic value ka sum hota hai.

Extrinsic value is related to time. Maan lijiye ki aapke saamne do options contract hai - ek hai expiry 1 mahine door hai toh doosre ka expiry 3 mahine door hai. Doosre option ka extrinsic value higher hoga, kyunki 3 mahine ke timespan mein 1 mahine se zyada price fluctuation hoga aur profitable exit points bhi zyada honge. Kyunki doosre contract mein aapko profit kamane ke zyada opportunities milenge, uss contract ka pricetag bhi zyada hoga.

Therefore, koii bhi options contract ka lifespan decrease hota hai toh uska extrinsic value bhi decrease hota hai.

Agar aap lambe expiry date waala options contract khareedenge, toh uska premium bhi relatively high hoga.

Angel broking ke intuitive mobile app par strike price, expiry date, aur option prices jaisi important information aap saaf saaf dekh sakte hai. You can become an informed investor by looking at such information, including the historical performance of assets. As your knowledge partner, angel broking wants to maximise your returns.

चलिए, एंजेल ब्रोकिंग की तरफ से आपको आज के अलविदा. ये podcast शेयर करना ना भूलियेगा - याद रखियेगा की ज्ञान बाटने से बढ़ता है । और फिर अंत में तोह financial markets एक ऐसी university है जिसमे कोई professor नहीं, सब students ही है ।