00:00Have you ever wondered why Nifty moves in the same way?
00:03But why do options premiums for different strikes move differently?
00:09A major reason for this is that options are ATM, ITM or OTM.
00:15Let's say Nifty is currently at 25,000
00:1725,000 Call, Option ATM will be there
00:20Calls below Rs 25,000 will generally be ITM.
00:24And calls above Rs 25,000 will generally be ITM.
00:28Now as the strike changes
00:31Delta and Gamma of the option can also be different
00:35This means that Nifty follows the same move.
00:37Different options may have different effects.
00:41So just understanding the direction of Nifty correctly is not enough.
00:45Which Strike are you choosing?
00:47It is equally important to understand its Moneyness, Gricks, Time to Expire and Risk.
00:54Now comes the question
00:55Which is the best for entry among ATM, ITM and OTM?
00:59There is no fixed answer to this.
01:01It depends on your strategy, risk and time to expire.
01:06But for the Option Buyer
01:08Comparing ATM or slightly ITM options can be a practical starting point.
01:14So just by looking at the cheap premium
01:17Choosing an OTM option is not necessarily better
01:20If you found this video useful
01:22So please like the video, subscribe and follow.
01:26And with No Chat Finance
01:27Keep learning Options in simple language
01:31do
Comments