Some seniors can clear my doubts here... This example I got from NSE site.. (with mild alterations for current prices)
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Example
Mr. XYZ is bullish on Nifty on 11th August, when the Nifty is at 4471. He buys a call option with a strike price of Rs.4600 at a premium of Rs. 88, expiring on 27th August. If the Nifty goes above 4688, Mr. XYZ will make a net profit (after deducting the premium) on exercising the option. In case the Nifty stays at or falls below 4600, he can forego the option (it will expire worthless) with a maximum loss of the premium.
The payoff schedule
On expiry
Nifty closes at ---- Net Payoff from Call Option (Rs.)
4100.00..................... -88
4300.00..................... -88
4500.00..................... -88
4688.00..................... 0
4700.00..................... 12
4900.00..................... 212
5100.00.....................412
5300.00.....................612
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My doubt is, If I buy a call option with the strike price 4900 for premium Rs.40 on 11th august and on expiry the nifty closes on 4688, so per above example the settlement for me will be 4900 - Rs.212 (1 lot total profit = Rs.10600) is this right?
---------------------------------
Example
Mr. XYZ is bullish on Nifty on 11th August, when the Nifty is at 4471. He buys a call option with a strike price of Rs.4600 at a premium of Rs. 88, expiring on 27th August. If the Nifty goes above 4688, Mr. XYZ will make a net profit (after deducting the premium) on exercising the option. In case the Nifty stays at or falls below 4600, he can forego the option (it will expire worthless) with a maximum loss of the premium.
The payoff schedule
On expiry
Nifty closes at ---- Net Payoff from Call Option (Rs.)
4100.00..................... -88
4300.00..................... -88
4500.00..................... -88
4688.00..................... 0
4700.00..................... 12
4900.00..................... 212
5100.00.....................412
5300.00.....................612
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My doubt is, If I buy a call option with the strike price 4900 for premium Rs.40 on 11th august and on expiry the nifty closes on 4688, so per above example the settlement for me will be 4900 - Rs.212 (1 lot total profit = Rs.10600) is this right?