Skip to main content

Featured

Shyam Metalics and Energy Limited IPO Detail, GMP, Key Dates etc

  Introduction : Incorporated in 2002 Metal Producer co, Such as  iron pellets, sponge iron, steel billets, TMT, structural products, wire rods, and ferro alloys Largest producers of ferro alloys in terms of installed capacity 4 th  player in the sponge iron industry.        Client List :      Jindal Stainless Limited, Rimjhim Ispat Limit are some of its domestic clients whereas Norecom DMCC, Norecom Limited, POSCO International Corporation, World Metals & Alloys, Traxys North America LLC, JM GLobal Resources, Vijayshri Steel Pvt Ltd, etc. are the international clients. Manufacturing plants  : located in Sambalpur in Odisha, Jamuria and Mangalpur in West Bengal.   Capacity to increase from 5.71 MTPA to 11.60  M TPA by 2025 Shyam Metalics and Energy Key Dates :   Date          :14-6-2021 To 16-6-2021   Fresh Issue    : Rs. 657 Cr.   OFS                : Rs. 252 Cr.   Total Issue Size   : Rs. 909 Cr.   Price Band     : 303 to 306   (Employee Discount

Basics of Options

Learning on Options :

 

The owner of an option can decide to exercise it or not.

Every option has limited life and after that time period it expires. say 30 days or Specified Expiry period.

American options can be exercised at any time before or at expiration.

European options can be exercised only at expiration.

 

Strike Price of an Option

Every option has a fixed strike price, which is the price that applies to the buying or selling of the underlying asset when the option’s owner exercises the option.



Market Price

Market price of an option (or market value or option premium) consists of intrinsic value and time value. Market price is something totally different from strike price.

Option premium is sum of Intrinsic value plus time value.

option value = Intrinsic value + Time value


So, Option is Combination of 2 Parts :
Intrinsic value
Time Value


Call options are in the money when their strike price is lower than the current market price of the underlying asset.

Call Pay Off: Spot- Strike

Put options are in the money when their strike price is higher than the current market price of the underlying asset.
 
Put Pay Off: Strike- Spot
 
Pay off of call option
Strike price < Market price
 
Pay off of Put Option

Strike Price > Market price

How to find intrinsic value of an option, let we understand following concept first....

 In the Money, At the Money, & Out of the Money

Options with intrinsic value are said to be in the money(ITM).

Options whose strike price is equal or very close to the current market price of the underlying asset are said to be at the money(ATM).

Other options, which have no intrinsic value, are said to be out of the money(OTM).

In short,

ITM option consist more of Intrinsic value

ATM option consist of both Intrinsic and Time Value

OTM option consist only Time value

 Example : 




Comments

Popular Posts