00:00Can the option premium decrease even if the market moves in your direction?
00:05Yes, because option premium is not solely affected by market direction
00:09There are four important factors that work behind this.
00:14First delta, gamma, theta and vega
00:17Delta tells you how much the option premium will rate when the market moves.
00:21gamma tells how fast delta is changing
00:25Theta tells how much the premium is decreasing with time.
00:28And vega tells how much impact the premium is having due to volatility i.e. changing IV.
00:33Simple example, suppose Didi bought a call option.
00:36The market has gone up a bit, delta will help
00:39The market moved up sharply, the effect of gamma may increase
00:42But as time passes, theta can reduce the premium.
00:46And if IV falls, then premium may come under pressure due to vega
00:50Therefore, in option buying, just see whether the market goes up or down.
00:54It is not enough
00:55It is very important to understand these four: direction, plus speed, plus time, plus volatility
01:00If you want to learn options in simple language
01:03So do follow or subscribe to no chart finance now.
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