9 hrs ago
PB Fintech Crash Sends Put Option Returns Soaring
PB Fintech’s share price dropped sharply on September 24.
This helped traders who had bought put options, which can become more valuable when a share price falls.
One 1,600 put option cost ₹27 in the morning.
A lot contained 350 options, so buying one lot cost ₹9,450.
By the end of the day, the option price had risen to ₹376.
The lot was then worth ₹1,31,600.
That represented a gain of ₹1,22,150 before brokerage, taxes and other costs.
The share-price fall followed proposed changes to insurance commissions.
PB Fintech said the changes could significantly reduce revenue from its general insurance business.
PB Fintech shares fell about 35% on September 24, closing at ₹1,207 on the NSE.
The 1,600 put option premium rose from ₹27 to ₹376 during the session.
One lot contained 350 shares, making the initial purchase cost ₹9,450.
At the closing premium, that lot was worth ₹1,31,600, a gain of ₹1,22,150 before costs.
The selloff followed proposed Insurance Regulatory and Development Authority of India changes to insurance distributor commissions.
- Who
- PB Fintech, its co-founder and Group CEO Yashish Dahiya, and traders holding its put options.
- What
- PB Fintech shares plunged about 35%, while its 1,600 put option rose from ₹27 to ₹376.
- Where
- On the NSE, involving PB Fintech’s futures and options market.
- When
- September 24; the article does not specify the year for the trading session.
- Why
- The decline followed proposed insurance-distributor commission changes by the Insurance Regulatory and Development Authority of India, which raised concerns about PB Fintech’s general insurance revenue.
Key facts
- Stock closing price
- ₹1,207 on the NSE
- One-day share decline
- About 35%
- Put option
- 1,600 PE
- Option premium move
- ₹27 to ₹376
- Lot size
- 350 shares
- Initial lot cost
- ₹9,450
- Closing lot value
- ₹1,31,600
- Reported gain before costs
- ₹1,22,150
Sources
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