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Old 10th December 2007, 10:58 PM
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Default Calculating Option Premiums?



Thanks for your brief reply sir,
what is formula for calculating option premium.
i have seen option calculator in several web sites,but i wish to know the formula can you sir.
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Old 11th December 2007, 09:55 AM
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There are many models available for calculating option premiums.

Black-Scholes model is the most popular one.

These models are complex and it is difficult (and time consuming) to calculate prices without an option calculator.

My observation is that option prices (especially for individual stocks) can be very different from their theoretical values.

I never use the theoretical price for option trading.

For options, it is best to make price decisions based on personal judgement and experience.
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Old 22nd November 2008, 02:49 AM
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Default Buying Options on ICICIDIRECT

Hi,

Just to get a feel of Options, I tried to buy a Call Option on ICICIDIRECT.

I chose SESAGOA Call option for 29Jan2009 with Strike of Rs 55.

When I clicked GET QUOTES I got a quote screen that had zeros every where. (LTP, DAY High, Day low etc). only figures were HIGH PRICE RANGE=40.00 and LOW PRICE RANGE=0.05

I clicked on the "Option Calculator" link on the quotes screen to figure out the option price / premium. However it asked for the volatility. Where Do I get the volatility?

And what does LTP on the F&O Contract Details screen represent? Price per share or price for the entire lot of shares?

Last edited by sudhashbahu : 22nd November 2008 at 02:52 AM.
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Old 22nd November 2008, 10:11 AM
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Quote:
Originally Posted by sudhashbahu View Post
Hi,

Just to get a feel of Options, I tried to buy a Call Option on ICICIDIRECT.

I chose SESAGOA Call option for 29Jan2009 with Strike of Rs 55.

When I clicked GET QUOTES I got a quote screen that had zeros every where. (LTP, DAY High, Day low etc). only figures were HIGH PRICE RANGE=40.00 and LOW PRICE RANGE=0.05

I clicked on the "Option Calculator" link on the quotes screen to figure out the option price / premium. However it asked for the volatility. Where Do I get the volatility?

And what does LTP on the F&O Contract Details screen represent? Price per share or price for the entire lot of shares?
The figures are 0 because no one trades these options.

Majority of the stock options available in a particular series are never traded.

If you are a beginner, you should avoid stock options and focus on index options.

The volatility data is available at NSE's site.
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