Fair Price (Intrinsic Value) Check in Navia APP

When trading Options in the Navia App, we protect you from placing orders at irrational prices with an inbuilt Fair Price (Intrinsic Value) Check.

Step 1: What is Intrinsic Value?

• Call Option = Spot Price – Strike Price (if positive, else 0)
• Put Option = Strike Price – Spot Price (if positive, else 0)

Think of it as the real value of the option if exercised right now.

 Step 2: Navia’s Logic

1. Up to 7% ITM from ATM → No restriction
2. Beyond 7% ITM → Only ±20% around Fair Price allowed

 Step 3: Example (NIFTY Spot = 25,000)

Case 1 – Within 7% ITM

• Strike = 24,000 Call Option (≈ 4% ITM)
• Intrinsic Value = 25,000 – 24,000 = 1,000

✅ Allowed: Any reasonable price (no band applied).

Case 2 – Beyond 7% ITM

• Strike = 23,000 Call Option (≈ 8% ITM)
• Intrinsic Value = 25,000 – 23,000 = 2,000

✅ Allowed range = 2,000 ± 20%

= 1,600 to 2,400

❌ Orders outside this band will be rejected.

✅ Why This Helps

• Protects you from overpaying/underpricing.
• Ensures compliance with SEBI regulations.
• Keeps option pricing fair and rational.

Simple Rule to Remember:

• Within 7% ITM = Free
• Beyond 7% ITM = ±20% Band