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Optionalysis: How STT Affects Option Prices (Plus, Portfolio Changes)

This is an archive for Capital Mind Premium subscribers, sent on Feb 8, 2014.

A number of options traders start taking positions and hold them too long, and then we have the uniquely Indian situation where options on expiry day could trade below even their intrinsic value! A holder of a Nifty 5,500 call might be surprised to find the option trading at Rs. 495 when the Nifty is at 6,000. This goes against all logic, because the option is supposed to at least have as much value . . .

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