PCR Trading Strategy

Moneyness of Options

Moneyness shows whether the option has intrinsic value:

In the Money (ITM): Already profitable if exercised.

At the Money (ATM): Strike price = market price.

Out of the Money (OTM): No intrinsic value, only time value.

Factors Affecting Option Prices (Option Greeks)

Options are influenced by multiple factors:

Delta: Sensitivity to underlying price changes.

Gamma: Sensitivity of Delta.

Theta: Time decay – options lose value as expiry nears.

Vega: Sensitivity to volatility.

Rho: Sensitivity to interest rates.

Payoff Profiles

Buyer of Call/Put: Limited loss (premium), unlimited profit.

Seller of Call/Put: Limited profit (premium), unlimited or large risk.