---
title: "What moves an option price: five factors on a Nifty example"
description: "Index level, time, implied volatility, rate and dividends: the five dials of an option price, and why a call can fall when Nifty rises, on dated NSE data."
source_url: "https://www.rupeecase.com/learn/path-14/module-14-5-what-moves-an-option-price"
---

[Path 14 5 of 17](/learn/path-14/)Five things that move an option's price[Next 14.6](/learn/path-14/module-14-6-expiry-and-settlement)

On Sunday 1 Feb 2026, Budget Day, Nifty closed at 24,825.45. Two calls for the 10 Feb expiry settled that day: the 25,100 call at Rs 146.00 and the 25,600 call at Rs 42.60. On Monday Nifty rose 1.06% to 25,088.40. The 25,100 call settled at Rs 205.10, up 40.5%. The 25,600 call settled at Rs 41.90. The index went up and the premium went down. If you have ever asked why your call did not rise when the Nifty did, this is the answer. The index is one of five things that move the price, and on that Monday it was not the strongest.

3By the end you can

1. Name the five things that move an option's price and say which are tiny for a weekly Nifty option.
2. Explain how a call can fall on a day the index rises.
3. Say where implied volatility comes from and why nobody observes it.

Watch in the terminal: what does "Same money in NIFTY 50" mean? A short tutorial on sample data.

## The idea, plainly

An option price is intrinsic value plus time value, as [module F14](/learn/path-14/module-14-4-moneyness-intrinsic-and-time-value) showed. Five things push it around. I call them the dials. The strike is not one of them. It is fixed in the contract, and the dials are measured against it.

1. **The level of the index.** Calls rise with the index and puts fall. How much depends on the strike. The 25,100 call moves about 34 rupees for every 100 points of index. The 25,600 call moves only 13. That rate is the [delta](/learn/glossary#delta), in [module F21](/learn/path-14/module-14-7-delta).

2. **Time left.** Every calendar day takes time value away, index or no index. One day costs the 25,100 call about Rs 13.31 and the 25,600 call about Rs 7.81. That is [theta](/learn/glossary#theta), in [module F22](/learn/path-14/module-14-8-theta-time-decay).

3. **Implied volatility.** How far the market expects the index to move. One point of it is worth about Rs 14.26 on the 25,100 call and Rs 8.18 on the 25,600 call. Nobody observes it. It is solved backwards from the price, as [module F23](/learn/path-16/module-16-1-historical-vs-implied-volatility) explains.

4. **The interest rate.** Small over a week. A higher rate lifts the future, which lifts calls and trims puts. One percentage point was worth about Rs 2 on the 25,100 call, against Rs 14.26 for one point of volatility.

5. **Dividends.** The index shares pay them, and the future is priced lower by what falls due before expiry. Rate and dividends meet in the gap between the future and the spot, the carry. On 2 Feb the March future stood 209 points above the spot.

A call gains as the index rises and loses as the days pass

Price of the 25,100 call against the level of the future, from the Black 76 engine at the 1 Feb implied volatility, with 9, 5 and 1 days left. Read across for the index dial and between curves for the time dial. Source: NSE end of day data, computed by RupeeCase. As of 1 Feb 2026.
Read 2 more paragraphs, 72 words
Three of the five do most of the work in a weekly option: the index, time and volatility. Rate and dividends are small over days and grow with the months left. The dials also move together, and the market shows only their sum.

Read the list against the story. On Monday the index dial pushed the 25,600 call up. The time dial and the volatility dial pushed it down, and they won.

### Why a far option feels the index so little

Delta is also a rough odds meter. The 25,100 call had a delta of 0.34 and the 25,600 call 0.13. The market saw the far strike as much less likely to finish in the money, so a move in the index shifts its price only a little. A near option follows the index more closely. A far one waits for a big move and in the meantime pays for every day.

### How an option price is calculated

No exchange formula sets the price. Buyers and sellers set it, in the order book. A model turns the five inputs into a fair price. This school uses Black 76, which prices a Nifty option off its forward. Traders also run a model backwards: they take the traded price and solve for the volatility that makes the model agree. That number is the IV. The IV column on a chain is the same idea, though sources differ a little in model and inputs. [Module I04](/learn/path-14/module-14-9-binomial-tree-to-black-76) builds the model step by step.

## Worked example: Budget Day to Monday, 1 to 2 Feb 2026

We follow two calls for the 10 Feb expiry across one night. Prices are in rupees per unit. The middle row of the table asks what each call would have been worth if only the index and the clock had changed, with implied volatility held where it was on Sunday. It is a Black 76 estimate, not an NSE price.

The term this section turns on: Implied volatility

From the module glossary; every term is in the Learn glossary too. Source: Module 14.5, Five things that move an option's price.

| What we read | 25,100 call | 25,600 call |
| --- | --- | --- |
| Settle, Sunday 1 Feb | 146.00 | 42.60 |
| Implied volatility, Sunday | 16.8% | 17.2% |
| Estimate: index up 1.06%, one day gone, same volatility | 243.79 | 78.76 |
| Implied volatility, Monday | 14.2% | 13.6% |
| Settle, Monday 2 Feb | 205.10 | 41.90 |
| One lot of 65 units, Sunday to Monday | Rs 3,841.50 | −Rs 45.50 |

India VIX rose into the Budget and fell away once it had passed

India VIX daily closes, 12 Jan to 10 Feb 2026. The high is Budget Day, Sunday 1 Feb. Options priced the event before it and dropped it after. Source: NSE end of day data, computed by RupeeCase. As of 10 Feb 2026.
One day on, the index move and the volatility move both change what a call is worth

| Index move | One day on, rupees |
| --- | --- |
| IV −3 | IV same | IV +3 |
| −2% | −8,604 | −7,519 | −6,071 |
| −1% | −6,944 | −5,110 | −3,015 |
| 0% | −3,419 | −883 | +1,751 |
| +1% | +2,782 | +5,662 | +8,545 |
| +2% | +12,028 | +14,727 | +17,485 |

Green is profit and red is loss; deeper colour means a larger amount. The outlined cell is the starting point.

Profit or loss in rupees on one lot of the 25,100 call, one day after 1 Feb 2026, from the Black 76 engine. The actual Monday was an index rise of 1.06% with implied volatility 2.6 points lower, close to the row for a rise of one percent and the column for volatility three points lower. Source: NSE end of day data, computed by RupeeCase. As of 1 Feb 2026.
Read 3 more paragraphs, 146 words
The index and the clock together would have lifted the 25,600 call to Rs 78.76. Then implied volatility fell 3.7 points and took Rs 36.86 back. The 25,100 call lost a similar Rs 38.69 to the volatility drop, but its gain from the index was bigger, so it still ended 40.5% higher.

Why did volatility fall? India VIX, the market's own measure of expected volatility, rose into the Budget and fell away once it was past. An event that is still ahead is priced into the options. When it passes, that part of the price leaves.

One example proves little, so here is the whole grid. Each cell is the profit or loss, in rupees, on one lot of the 25,100 call bought at Rs 146.00 on Sunday, one day later, for a given move of the index and a given shift in implied volatility.

## The common mistake

The belief: If the Nifty goes up, my call has to go up. It treats one dial as the whole instrument. On Monday 2 Feb 2026 the index rose 1.06% and the 25,600 call fell from Rs 42.60 to Rs 41.90. A call far from the index has a small delta, so it feels a rise only a little. It also pays for a day of time and, here, for a drop in implied volatility. Before you blame the market, ask what else changed. Check the days left, the implied volatility and how far the strike sits from the index. Each is a dial, and the index is only the loudest.

Watch in the terminal: how does the app call a stock large or small? A short tutorial on sample data.

## Key takeaways

* Five dials move an option price: index, time, volatility, interest rate, dividends.
* The strike is fixed. The dials are measured against it.
* A far out of the money call barely feels an index rise.
* Implied volatility is solved backwards from the price, not observed.
* Time takes value every calendar day, index or no index.
* A rise in the index can come with a fall in the premium.

**Before you trade.** Derivatives trading carries a high risk of loss. SEBI's study "Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26)" (August 2026) found that 87.7% of individual traders in equity F&O made net losses in FY26, with aggregate net losses of Rs 91,685 crore. [Read the SEBI study](https://www.sebi.gov.in/reports-and-statistics/research/aug-2026/study-profitability-of-individual-traders-in-the-equity-derivatives-segment-fy25-fy26-_103835.html)

What does Five things that move an option's price cover?Why a call can fall on a day Nifty rises. Five dials move an option's price, and the index is only one of them. It works through The idea, plainly, Worked example: Budget Day to Monday, 1 to 2 Feb 2026, The common mistake, Key takeaways. It is module 14.5 of Path 14, Options and Greeks, about 8 minutes of reading, free.

TTry it

## Greeks calculator, on the same example.
Delta to rho, and vanna to colour in expert mode, from one Black 76 engine. Dated NSE end of day data, nothing live, no orders.

**Greeks calculator**, Nifty, 1 Feb 2026, 10 Feb 2026 expiry.

[Open the greeks calculator](/learn/tools/greeks-calculator?chain=NIFTY_2026-02-01_2026-02-10)

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F&O at RupeeCase will do one job: protect a portfolio you already own, by a rule published before it runs. No speculation, no naked option selling, no leveraged bets. It is not available yet.

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  [No hedgeFalls with the marketWith a putA floor, for a premiumIllustration with made up numbers, not a product and not a recommendation.](/hedging)

QQuick check

## 10 questions, 7 to pass.
Each attempt draws 10 of the 15 questions in this module's bank, and a retake draws a fresh set. A pass gives this module's Certificate of Completion. Your result stays on this device and counts towards the Path 14 certificate.

7 of 10 correct passes module 14.5

Every answer is explained when you check; a retake is always free. Source: RupeeCase Learn quiz rules (70% to pass).

  Passed

###

  Certificate ID

Download PNGPrint or save as PDF[Check the ID](/learn/certificates/verify)
Self paced and unproctored. A record of completing free education by RupeeCase; not a NISM certificate and not endorsed by NISM, NSE, BSE or SEBI. It qualifies no one to deal, advise or publish research.

CCheck yourself

## Path 14 so far.
Your quick check results on this device, stop by stop.

Stop 5 of 17 on Path 14

Options and Greeks: every live stop, this module ringed. Source: RupeeCase Learn, Path 14.

1. [14.1The call option, told as a storyNot yet](/learn/path-14/module-14-1-call-option-explained)
2. [14.2The put option, told as a storyNot yet](/learn/path-14/module-14-2-put-option-explained)
3. [14.3Buyer or seller: payoffs, margin, win rate and expectancyNot yet](/learn/path-14/module-14-3-option-buyer-vs-seller)
4. [14.4Moneyness, intrinsic value and time valueNot yet](/learn/path-14/module-14-4-moneyness-intrinsic-and-time-value)
5. [14.5Five things that move an option's priceNot yet](/learn/path-14/module-14-5-what-moves-an-option-price#quiz)
6. [14.6Expiry and settlement: cash, physical, exercise and STTNot yet](/learn/path-14/module-14-6-expiry-and-settlement)
7. [14.7Delta: speed, hedge ratio and the probability shortcutNot yet](/learn/path-14/module-14-7-delta)
8. [14.8Theta: the time decay curve into expiryNot yet](/learn/path-14/module-14-8-theta-time-decay)
9. [14.9From a binomial tree to Black Scholes and Black 76Not yet](/learn/path-14/module-14-9-binomial-tree-to-black-76)
10. [14.10Put call parity and synthetic positionsNot yet](/learn/path-14/module-14-10-put-call-parity)
11. [14.11Gamma: why it grows so fast near expiryNot yet](/learn/path-14/module-14-11-gamma)
12. [14.12Vega: volatility exposure across weekly and monthly expiriesNot yet](/learn/path-14/module-14-12-vega)
13. [14.13Rho and interest rates in Indian optionsNot yet](/learn/path-14/module-14-13-rho)
14. [14.14Position Greeks for multi leg strategiesNot yet](/learn/path-14/module-14-14-position-greeks)
15. [14.15Dynamic delta hedging and the P&L identityNot yet](/learn/path-14/module-14-15-delta-hedging)
16. [14.16Gamma scalpingNot yet](/learn/path-14/module-14-16-gamma-scalping)
17. [14.17Second order Greeks: vanna, volga, charm, speed and colourNot yet](/learn/path-14/module-14-17-second-order-greeks)
18. [TPath test, 30 questionsNot yet](/learn/path-14/module-14-17-second-order-greeks#pathTestSection)

Path 14 in reading time: 149 minutes over 17 modules

Minutes of reading per module, this one in amber. Source: RupeeCase Learn, Path 14.

    Explore next

## Put the module to work.

* [ToolOption payoff builderLegs on a dated Nifty chain, breakevens and charges](/learn/tools/payoff-builder)
* [Free module 14.4Moneyness, intrinsic value and time value8 min read](/learn/path-14/module-14-4-moneyness-intrinsic-and-time-value)
* [Free module 14.7Delta: speed, hedge ratio and the probability shortcut8 min read](/learn/path-14/module-14-7-delta)
* [Free module 14.8Theta: the time decay curve into expiry7 min read](/learn/path-14/module-14-8-theta-time-decay)
* [Free module 16.1Volatility: historical against implied7 min read](/learn/path-16/module-16-1-historical-vs-implied-volatility)
* [Free module 14.9From a binomial tree to Black Scholes and Black 769 min read](/learn/path-14/module-14-9-binomial-tree-to-black-76)

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SSources

## Go to the source.
7 sources, NSE the most cited

The publisher of each source listed below. Source: Module 14.5 source list.
1. [NSE, India VIX: index page and methodology](https://www.nseindia.com/static/products-services/indices-indiavix-index) NSE
2. [NSE, India VIX white paper](https://nsearchives.nseindia.com/web/sites/default/files/inline-files/white_paper_IndiaVIX.pdf) NSE
3. [NSE, option chain (Nifty 50 index options)](https://www.nseindia.com/option-chain) NSE
4. [NISM, Series VIII Equity Derivatives: test objectives (options unit)](https://www.nism.ac.in/revamp-nism/test-objectives-revised-nism-series-viii-equity-derivatives-certification-examination/) NISM
5. [SEBI Investor, Understanding derivatives](https://investor.sebi.gov.in/understanding_derivatives.html) SEBI
6. [Black, F., The pricing of commodity contracts, Journal of Financial Economics, 1976](https://doi.org/10.1016/0304-405X(76)90024-6) Paper
7. Hull, J., Options, Futures, and Other Derivatives, Pearson (factors affecting option prices) Book

GTerms

## 5 terms from this module.
Implied volatilityThe volatility that makes an option pricing model return the option's traded price. It is solved from the price and is not observed directly.
[Delta](/learn/glossary#delta)The change in an option's price for a one point move in the underlying. A far out of the money option has a small delta.
[Theta](/learn/glossary#theta)The premium an option loses each calendar day as time passes, other things equal.
[Vega](/learn/glossary#vega)The change in an option's price for a one point change in implied volatility.
Cost of carryInterest less the dividends the index pays, the amount by which a future stands above the spot.
[All 230 terms in the glossary](/learn/glossary)

[Question people askWhy is my option premium not rising even though Nifty went up?A short answer with a dated chart](/learn/questions/why-premium-not-rising)[Question people askHow is an option price calculated?A short answer with a dated chart](/learn/questions/how-option-price-is-calculated)[Related module14.4 Moneyness, intrinsic value and time value8 min, Beginner](/learn/path-14/module-14-4-moneyness-intrinsic-and-time-value)[Related module14.7 Delta: speed, hedge ratio and the probability shortcut8 min, Beginner](/learn/path-14/module-14-7-delta)[Pillar guideDerivatives and Quant115 modules across paths 12 to 19](/learn/derivatives)

Education only, not investment advice, a research report or a recommendation to buy, sell or hold any security. RupeeCase (QC Alpha Technologies Pvt Ltd) is not registered with SEBI as an investment adviser or research analyst. Contracts and prices shown are for illustration only, come from NSE end of day files at least 30 days old, and are not recommendatory. Derivatives trading carries a high risk of loss.