Comment on Theta

Ankit commented on 23 Apr 2017, 10:52 AM

Okay sir,
Take this example(imagined not real) of CALL OPTION
Spot 400
Strike 370
9 days to expiry
Status – DEEP ITM
Premium 25
Sir my question is if we playing a ITM OPTION
Then that option must have positive intrinsic value and positive time value
Say atlest 5 or 7 or 10 or whatever you say for time value
Intrinsic value = spot-strike=400-370=30 right
Then premium must be more than 30 for above case
But instead of >30 it is at 25
This driving me to this formula
Premium = (spot-strike)+time value
25=(400-370)+time value
Time value= 25-30=-5
Is this suggests the time value is in minus (i think not possible)
Premium must have ZERO or a positive mon ZERO NUMBER FOR both its content.
Sir this is really happend i was considering a stock option few days ago
Where ITM option premium was different from what we have knows…….
Thanks sir…..

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