Comment on Application of Option Greeks

Prasanna commented on 22 Nov 2016, 08:03 AM

Let us say I pay options premium for the BankNify Short position 19400 CE of Rs.300. per share. I have 5 days to expiry. Now i am sure that at the end of the expiry my option premium will be zero. Assume that the bank nifty is going to be flat. Due to the effect of theta Now my option premium must decrease atleast reduce Rs 60 per day approx. This Rs.60 per day decrease will happen at what rate ? Will it happen at the rate of Rs10per hour? Will it happen overnight after the trading hours? If it is so then, next day the option premium will open at Rs60 less than the previous day? Kindly explain me how the theta will be applied on the premium whether hourly or daily? Please reply to [email protected]

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