What does Premium mean in options?
Premium is the downpayment that the buyer is required to make to the seller for entering into the options contract.
What is the impact of moneyness on options premium?
It is widely seen that ITM options command the highest premium, followed by ATM options and lastly by OTM options.
Can I use the Options Premium received to place new orders in F&O?
Yes, Options premium received on selling options contracts can be used to place new orders. However, it cannot be used on the same day but from the next trading day. For Example, Mr X shorted 1 lot of Nifty 18000PE trading at 100. The premium of ...
What does assignment mean in options?
Is a situation where the seller of the option will have to sell the underlying asset at the strike price, in case of call options, and buy the underlying asset at the strike price, in case of put options. However, in India, all options contracts are ...
What is an options debit spread?
A debit spread occurs when the investor buys options with a higher premium and sells options with a lower premium thereby resulting in a net premium outflow.
What is an options credit spread?
A credit spread occurs when the investor buys options with a lower premium and sells options with a higher premium, thereby resulting in a net premium inflow.