Options settlement doubts

[market_looser]

Dear all,

I have a very big doubt in the options settlement.

If i buy any share at cash market 100 rupees and sell at 120(after a month), the buyer at 120 will give me my profit. so my profit is given by the buyer of my shares at 120. This is in cash market.

If i buy a 50 strike call at 2 rupees, market lot of 1000. I will pay 2000 to enter the call option. assume after 2 weeks before expiry the share price goes to 70 rupees, so the call will be atleast 20 rupees, so my profit is 20 - 2 = 18, the lot is 1000. so my final profit is 18000.

My doubt is who will pay my profit. assume the buyer of my sold call pays 20* 1000 which is only 20000. But i will get 18000, please tell me who will pay the profit fro me. Do i get my profit from his buying ???

If i am confusing you... sorry......

Thanks

Market looser

 

[ivanboesky]

Why do you care who pays you your profit? Anyway, your logic about the cash market buyer giving you your profit is flawed too.

 

[Rubal]

Dear all,


My doubt is who will pay my profit. assume the buyer of my sold call pays 20* 1000 which is only 20000. But i will get 18000, please tell me who will pay the profit fro me. Do i get my profit from his buying ???


Market looser

Ull get Rs, 20000 only.....ur net position will 18000 in ur hand as u have paid Rs 2000 as a premium b4..

Thanks