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

Was this article helpful?

That’s Great!

Thank you for your feedback

Sorry! We couldn't be helpful

Thank you for your feedback

Let us know how can we improve this article!

Select at least one of the reasons
CAPTCHA verification is required.

Feedback sent

We appreciate your effort and will try to fix the article

Related articles

Still need help?