I'm quite new to trading so I've few doubts about square off option in trading b'cause of my recent experience in exercising it.
I've bought call option(CE) of Aloktext Oct 2012 at a strike price 17.50 in the first week of October 2012, after few days seeing the stock going down I've decided to exercise 'Square off' option from my IIFL terminal, at the time when I exercised(used) 'Square off' option the price of that option(Aloktext CE 17.50 Oct option) was Rs.0.10, as far my little knowledge I should get the Rs. 0.10*10000(lot size)=Rs.1000. But I didn't get it. Note, after I used square off at Rs.0.10 the price went down to Rs.0.05 per lot for the strike price of 17.50, and it stayed at that price till the expiry(yesterday).
So my question is if someone opted for 'Square off' at a particular price of the option, in my case Rs.0.10, should the person gets the amount irrespective of the option being sold or not at that price. Or is it just like regular selling of the option lot, if it is sold it's sold or if it is not it's not(we still hold those lots).
Can somebody clarify me, sorry for posting long post(wanted to be more clear).
I've bought call option(CE) of Aloktext Oct 2012 at a strike price 17.50 in the first week of October 2012, after few days seeing the stock going down I've decided to exercise 'Square off' option from my IIFL terminal, at the time when I exercised(used) 'Square off' option the price of that option(Aloktext CE 17.50 Oct option) was Rs.0.10, as far my little knowledge I should get the Rs. 0.10*10000(lot size)=Rs.1000. But I didn't get it. Note, after I used square off at Rs.0.10 the price went down to Rs.0.05 per lot for the strike price of 17.50, and it stayed at that price till the expiry(yesterday).
So my question is if someone opted for 'Square off' at a particular price of the option, in my case Rs.0.10, should the person gets the amount irrespective of the option being sold or not at that price. Or is it just like regular selling of the option lot, if it is sold it's sold or if it is not it's not(we still hold those lots).
Can somebody clarify me, sorry for posting long post(wanted to be more clear).