Options trading part 6: practice bonus

You have learned in school, on television, or YouTube how to visualize atoms, protons, neutrons, electrons, etc.

This model is entirely inaccurate, yet we use it because it helps us visualize the specifics of these abstract subjects.

Consider everything in this article to be an oversimplification to assist you with more advanced reading about options trading

Assume that I have made some mistakes in this articles

https://www.calculator.net/percent-calculator.html?c3par1=1154.70&c3par2=1535&ctype=3&x=87&y=10#pctdifference

As delta decreases, so does the premium.

23000 - 20630 = 2370
https://www.calculator.net/percent-calculator.html?c3par1=20630&c3par2=23000&ctype=3&x=93&y=24#pctdifference

Delta PNL

Every options contract has a delta

between 0 and 1

or 0 and -1

Current price of bitcoin: $20630Call option expires June 24 (within 7 days)Strike price: $23000
delta: 0.24 Δ
theta: -62
premium: $486
Vega: 10.41
delta * change in price
0.24 * 3507.1 = $841.704
delta * absolute change in price = delta PNL
0.24 * -3508 = −$841.92

As the underlying moves, the delta moves because of Gamma.

strike price - current btc price (underlying)
$23000 - $20630 = 2370
$23000 (strike price) - 2370 = $20630
(0.24 + 0.48) / 2 = 0.36 Δ
average delta Δ * price move = Gamma PNL 
0.36Δ * 3507.1 = $1262.556
$23000 + 3508 = $26507.10
(0.24Δ + 0.06Δ) ÷2 = 0.15Δ
average delta Δ * difference in move = Gamma PNL 
0.15Δ * −3507.10 = -$596.207
Current price of bitcoin: $20630Call option expires June 24 (within 7 days)Strike price: $23000
delta: 0.24 Δ
theta: -62
premium: $486
Vega: 10.41

In addition, the time decay accelerates as your option contracts approach “At the money” (ATM)

-60 * 7 = −420
Current price of bitcoin: $20630Call option expires June 24 (within 7 days)Strike price: $23000
delta: 0.24 Δ
theta: -62
premium: $486
Vega: 10.41
days to expiration - vol points loss
10.41 * -13 = −135.33
Gamma PNL:  $1262.65
Time decay: -$420
Vega loss: -$135.33
----------------------
Combined: $751.65

Exchanges

Deribit

Sign up on Deribit and receive 10% discount on fees for trading futures & options: https://www.deribit.com/reg-572.9826

Trading platform: Delta exchange

If you’re seeking to signup and want a 10% discount

You can use my referral link

https://www.delta.exchange?code=medium

ByBit exchange

ByBit Options (Discount on fees and $100 deposit bonus): https://www.bybit.com/register?affiliate_id=6776&group_id=1653&group_type=1

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