I have observed that on the expiry day, Nifty OTM Options are squared of at Rs. 0.05 (i.e. 5 paise, which is the lowest possible price for any Option).
There are a very huge quantity of order book and also trades at Rs. 0.05 that happen for all OTM options, Puts or Calls post 3:15 pm on expiry day. I would like to know why people SQUARE OFF their loss making LONG position on OTM Option by selling at Rs. 0.05. I am sure that the sellers are not fresh sellers but only people wh0 already were buyers earlier and are now Squaring off their long positions of these OTM options.
I mean why square off even at Rs. 0.05, pay brokerage, taxes etc , WHY not allow the loss making position expire worthless so no need to pay, brokerage, taxes etc.
Are there any advantages of Squaring LONG OTM Options at Expiry?
There are a very huge quantity of order book and also trades at Rs. 0.05 that happen for all OTM options, Puts or Calls post 3:15 pm on expiry day. I would like to know why people SQUARE OFF their loss making LONG position on OTM Option by selling at Rs. 0.05. I am sure that the sellers are not fresh sellers but only people wh0 already were buyers earlier and are now Squaring off their long positions of these OTM options.
I mean why square off even at Rs. 0.05, pay brokerage, taxes etc , WHY not allow the loss making position expire worthless so no need to pay, brokerage, taxes etc.
Are there any advantages of Squaring LONG OTM Options at Expiry?