Hi all,
Till now, I've been trading in Stock market, Cash segment.
Now, I'd like to trade in F&O Segment.
Kindly, clarify the following queries.
1Q) Suppose I buy a Call option of ICICI Bank @ an Strike price of Rs.480/- (Lot size: 175) with an Expiry date 25/September/2008 and the premium payable is Rs.260 per share i.e., total premium payable is 260*175= 45,500/-.
1.1Q) Now if on or before the expiry date, the ICICI Bank is trading at Rs.800/- per share, can I exercise the call option to buy at the strike price.
1.2Q) If I exercise the call option, do I have to Cash settle (480*175= 84,000/-) i.e., do i have to pay remaining balance amount of Rs.38,500/-(contract value minus premium or 84000-45500= 38500) or is the premium paid sufficient for square off?
1.3Q) Is the premium paid refundable/ adjustable i.e., will my break-even price be Rs.740/- (strike price plus premium or 480+260=740/-) or Rs.480/-(Strike price).
1.4Q) If after few days, the premium rises to Rs.300/-, do I've to pay difference amount and will my break even price rise to Rs.780/-. And if the premium decreases to Rs.200/- will the difference amount be credited into my account and will the break even price then become Rs.680/-.
1.5Q) In F&O segment, is it sensible to buy at lower premium or high premium?
1.6Q) If I buy at a low premium, say Rs.10/- and the MTM price raises the premium to Rs.20/- will my loss be restriceted to the initial premium paid or End of day premium.
1.7Q) If I wish to sqaure off Call option, do I've to take delivery and then settle in Cash segment or Can I just enter in to opposite transaction i.e., put option.
1.8Q) I learnt that Option indices are European style i.e., can squared off only on expiration date. Now, my query is Can I square off Option indices (CE), simply by entering into opposite transaction before the Expiration date?
In the mean time clarify the afore-mentioned queries. If I get further doubts, I'll drop an enquiry.
Thanking you,
Sangfroid22
Till now, I've been trading in Stock market, Cash segment.
Now, I'd like to trade in F&O Segment.
Kindly, clarify the following queries.
1Q) Suppose I buy a Call option of ICICI Bank @ an Strike price of Rs.480/- (Lot size: 175) with an Expiry date 25/September/2008 and the premium payable is Rs.260 per share i.e., total premium payable is 260*175= 45,500/-.
1.1Q) Now if on or before the expiry date, the ICICI Bank is trading at Rs.800/- per share, can I exercise the call option to buy at the strike price.
1.2Q) If I exercise the call option, do I have to Cash settle (480*175= 84,000/-) i.e., do i have to pay remaining balance amount of Rs.38,500/-(contract value minus premium or 84000-45500= 38500) or is the premium paid sufficient for square off?
1.3Q) Is the premium paid refundable/ adjustable i.e., will my break-even price be Rs.740/- (strike price plus premium or 480+260=740/-) or Rs.480/-(Strike price).
1.4Q) If after few days, the premium rises to Rs.300/-, do I've to pay difference amount and will my break even price rise to Rs.780/-. And if the premium decreases to Rs.200/- will the difference amount be credited into my account and will the break even price then become Rs.680/-.
1.5Q) In F&O segment, is it sensible to buy at lower premium or high premium?
1.6Q) If I buy at a low premium, say Rs.10/- and the MTM price raises the premium to Rs.20/- will my loss be restriceted to the initial premium paid or End of day premium.
1.7Q) If I wish to sqaure off Call option, do I've to take delivery and then settle in Cash segment or Can I just enter in to opposite transaction i.e., put option.
1.8Q) I learnt that Option indices are European style i.e., can squared off only on expiration date. Now, my query is Can I square off Option indices (CE), simply by entering into opposite transaction before the Expiration date?
In the mean time clarify the afore-mentioned queries. If I get further doubts, I'll drop an enquiry.
Thanking you,
Sangfroid22
