How to settle Options?

L

leo_3455

Active Member
#71
#71
Yes correct. Nifty 6200 Call, if Nifty ends at 6200 also, the value of it will be 0 and I dont think anyone will give 1 to buy, unless they want to lose Rs. 1.
 
R

rakesh_29

New Member
#72
#72
leo_3455 said:
Yes correct. Nifty 6200 Call, if Nifty ends at 6200 also, the value of it will be 0 and I dont think anyone will give 1 to buy, unless they want to lose Rs. 1.
Click to expand...
Sanju,

Whenever you sell any Option, you should be worried only if the Option becomes ITM. If it is an Index Option, this worry is only on expiry day since if the Index Option sold by you becomes ITM before expiry date, it cannot be exercised by the buyer. So, at expiry, if your Option is ITM, you have to worry about squaring up by buying, or letting it expire, with exchange doing the settling.

If, on expiry, the Option sold by you is still OTM, you get to keep all the premium received on selling. Lucky YOU!

But don't tell me NIFTY 6200 call can be sold for rs 50!!! With NIFTY around 5000 today, a 6200 Call would not be over RS 1-2, which is not worth selling, considering the commission costs.

-Rakesh
 
M

Myfuturestock

New Member
#73
#73
Hello,

Can anyone help me in arbitration, or sensible hedging using Stock options. (The last time I had read about arbitration was in a pdf article known as Stocks Made Simple does anyone know where to find this article). If so please let me know regards

Myfuturestock
 
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