A Beginner's way to trade options.

[Flock]

My understanding:

NSE never squares of options after expiry. If you dont square off before expiry, then:

If you have written an option and it is out of the money, nothing done to your account. If it is in the money, the difference between the strike price and the closing price of the underlying * lot size, is debited to your account.

If you have purchased and option, then if it is out of the money, you just lose the premium. Nothing done. If it is in the money, then it is exercised. That is the difference between the strike price and the closing price of the underlying * lot size, is credited to your account. Any related taxes are debited to your account.

Others, please correct me if I am wrong.

Thanks.

 

[Smart_trade]

i have a question...if some one could answer it...

suppose i write 1lot call 4300 nifty option at some premium price...when nifty was at
4200.


now on expiry date if the nifty is about to close at 4400.just before the closing on expiry if i try to square off the premium is 120.
it is 20 more than the difference between my strike price and currentprice(100).


my query is if i dont square off on the last day then the nse will squareoff automatically for me.so at what premium price will it square off.
100(which is the actual difference) or 120 which was the last offer price.

thanks in advance.

The option is in the money by Rs 100 so NSE will excercise at 4400 and debit Rs 100 x Qty ( 50 in our case ) to your account....and NOT 120 x Qty ........

Smart_trade

EDIT : the post is edited in view of Flock's and my posts below

 

[Flock]

ST, How will he get a credit. He has written the option, and it is in the money at expiry

 

[Smart_trade]

ST, How will he get a credit. He has written the option, and it is in the money at expiry

Oh...sorry,I mis-read it as he has bought it....as he has sold....it will be a debit of Rs 100 x50 =Rs 5000 to his account...I stand corrected...

Thanks Flock....sorry for the mix up....:lol:

ST

 

[teenguy]

thanks guys for the help....

 

[Smart_trade]

I had a short position in May Nifty 4000 and 3900 puts....I have squared both these positions today at Rs 10.35 and Rs4.10 respectively...this is done to free my margins for better utilisation in June options

Smart_trade

 

[scorpio77]

Thank you for the update on your position. Any recommendations on options today for Intra day or weekly?

I had a short position in May Nifty 4000 and 3900 puts....I have squared both these positions today at Rs 10.35 and Rs4.10 respectively...this is done to free my marging for better utilisation in June options

Smart_trade

 

[Smart_trade]

Thank you for the update on your position. Any recommendations on options today for Intra day or weekly?

No fresh positions yet...mkt not showing its hand .....

ST

 

[TFL]

No fresh positions yet...mkt not showing its hand .....

ST

What you are looking for to enter in the June option?

 

[Smart_trade]

What you are looking for to enter in the June option?[/QUOT

Looking to sell 4400 call June series, Hari....

ST