Hello ,
Do possibility premiums replicate the results of inflation ? Like for instance, during the last 10 years, has regular inflation been costs into premiums?
I believe I’ve learn the phrase premium as petroleum
quick reply is “form of”.
Futures contracts are leveraged, and traditionally, the premium on it’s termed as “price of carry”.
So in case you are lengthy 1 lot of Nifty Futures, you might be solely paying inr. 1L or in order margin however the contract worth is say 9L.
The vendor, normally The Arbitragers, will promote the contract attempting to cost in that price of carry, normally above the risk-free fee.Ofc premium varies with demand too, and in bull markets premiums go over 100pts a month what we see now and in bear markets we noticed days with premium at 10pts and in a single case subsequent month Futures contract was buying and selling at a reduction to present month.WTI crudeoil for a selected month’s Futures contract noticed a Contango.
Choices premium calculators additionally worth it with the risk-free fee element as one of many inputs.
Nice reply, Sure, Rf is factored in Black scholes however how does that improve the premium quoted? for instance all else stored equal together with the strike worth of an possibility, the present inventory worth, the time to expiration, the risk-free fee, and the volatility , would the worth of a name possibility of Reliance, say, at 5 strikes above underlying in 2012 be decrease than name possibility right now?
we will by no means pinpoint, in that sense.inflation cant be simply upwards as a single issue.
Mkt contributors have elevated, extra digitization, cheaper infra, higher tech and so on.
Outgoing name in 2000s was inr. 20-25/min. As we speak even in primary plan it’s inr 1/min.
Earlier most contracts had been money settled, now now we have bodily supply, extra expiry margins etcTo be sincere, it’s like attempting to grasp each mkt partipants thought course of by one individual. it wont make a lot sense. Like devices tick each second, what are they pricing in each second?
hmm perhaps so
Let’s see if another person has a view on this