Fair Price (Intrinsic Value) Check in Navia APP
Fair Price (Intrinsic Value) Check in Navia App
When you trade options on the Navia App, our system protects you from placing orders at irrational prices by applying an inbuilt Fair Price Check.
Step 1: What is Intrinsic Value?
Intrinsic Value is the real value of an option if it were exercised right now.
Option Type | Formula | Meaning |
Call Option | Spot Price – Strike Price (if positive, else 0) | Value gained if you buy at Strike and sell at Spot |
Put Option | Strike Price – Spot Price (if positive, else 0) | Value gained if you sell at Strike and buy at Spot |
Step 2: Navia’s Logic
Condition | Rule |
Up to 7% In-the-Money (ITM) from ATM | No restriction – you can place any reasonable price |
Beyond 7% ITM | Orders allowed only within ±20% of Intrinsic Value |
Step 3: Examples (NIFTY Spot = 25,000)
✅ Case 1 – Within 7% ITM
- Strike = 24,000 Call Option (≈ 4% ITM)
- Intrinsic Value = 25,000 – 24,000 = 1,000
- Rule = No band applied → Any reasonable order price is allowed.
✅ 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 range will be rejected.
Why This Helps
- Protects you from overpaying or underpricing
- Ensures compliance with SEBI regulations
- Keeps option pricing fair and rational
Simple Rule to Remember
- Within 7% ITM → Free pricing
- Beyond 7% ITM → ±20% Band applied
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