What to subtract from what in Premium Decay Analysis..?Confusion.

Tagged: Premium Decay values recording confusion

This topic has 1 reply, 1 voice, and was last updated 2 years, 10 months ago by Nitin Bhatia.

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- May 24, 2020 at 5:33 PM #285931
  
  Nitin Bhatia
  Keymaster
  
  Sir,
  While recording premium decay for the option for the highest OI,
  Suppose highest OI at call side 9500CE & 10000CE, & Put side is at 9000PE & 9200PE.
  
  Should I subtract premium of 9500CE from 9450CE or 9500CE from previous day’s 9500CE to check decay…?
  
  Please reply.
  Thanks.
- May 26, 2020 at 11:32 AM #288743
  
  Nitin Bhatia
  Keymaster
  
  you have understood premium decay analysis wrong, you must learn it again.
  Premium decay must be check of same strike prices and then compare put and call sides decay.
- May 26, 2020 at 12:09 PM #289712
  
  Nitin Bhatia
  Keymaster
  
  Add the premium of Top 3 strike price on Call side and on Put Side & then compare the premium movement on call side with put side to check premium decay.
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