OPTIONS after expiry date

[HashOptions]

24-NOV expiry of NIFTY is going down today.

I understand why its going down, time decay etc. But, who would be willing buy this OPTION now? At 3.30pm today, this OPTION will be null and void right?

What is the motivation for someone to buy it few hours before expiry?

PS: Newbie here, sorry for asking something basic.

 

[john302928]

24-NOV expiry of NIFTY is going down today.

I understand why its going down, time decay etc. But, who would be willing buy this OPTION now? At 3.30pm today, this OPTION will be null and void right?

What is the motivation for someone to buy it few hours before expiry?

PS: Newbie here, sorry for asking something basic.

Hi, you didnt mention about strike price.you can buy option even at 3.00pm. That is not at all an issue. It is all about entering in the right strike price and have adequate knowledge in deciding the direction of the trend and know how long the trend might be there.

 

[HashOptions]

Thanks for the reply.

For example, OPT-NIFTY-24-Nov-2016-7900-CE is selling at 8.35 premium. (down -16% today).

My question is, if someone buys at 3pm, then what is their strategy? To sell the same to someone else within 30 minutes?

Is it like passing a hot potato and hoping to make profits in the process?

 

[john302928]

Thanks for the reply.

For example, OPT-NIFTY-24-Nov-2016-7900-CE is selling at 8.35 premium. (down -16% today).

My question is, if someone buys at 3pm, then what is their strategy? To sell the same to someone else within 30 minutes?

Is it like passing a hot potato and hoping to make profits in the process?

There are two cases.
First case:
the person buying just half an hour before the expiry time, could be he is just covering his short sell order. So he is just closing his short position before expiry time. Similarly the person who sold it him might be already long and trying to close his position because he might be aware that the strike price might expire worthless in few min. atleast he can gad the 8.35 rs and if not, he might book profit on his long side, because if he let it to excersie then he has to pay 10X more STT. so he would want to close before expiry so he is selling it

Second case:
The person buying at 3.00pm might do a little gamble if he has adequate knowledge that within few min it might go upside so he would just buy and exit within few min.
The person who is selling it to him might initiate a fresh short position if he believes that the strike price is going to expire worthless then he might bag this 8.35 as profit

Hope it clarifies your query

 

[HashOptions]

There are two cases.
First case:
the person buying just half an hour before the expiry time, could be he is just covering his short sell order. So he is just closing his short position before expiry time. Similarly the person who sold it him might be already long and trying to close his position because he might be aware that the strike price might expire worthless in few min. atleast he can gad the 8.35 rs and if not, he might book profit on his long side, because if he let it to excersie then he has to pay 10X more STT. so he would want to close before expiry so he is selling it

Second case:
The person buying at 3.00pm might do a little gamble if he has adequate knowledge that within few min it might go upside so he would just buy and exit within few min.
The person who is selling it to him might initiate a fresh short position if he believes that the strike price is going to expire worthless then he might bag this 8.35 as profit

Hope it clarifies your query

Thanks a ton!:thumb:

 

[tradedatrend]

There is something wrong in your reading.

Yesterday nifty closed around 7960 and low was somewhere around 7945

Even in worst case scenario Nifty 7900 CE Nov Expiry would not have gone to Rs. 8.35

Please tell us the exact option strike price and time and expiry

Thanks for the reply.

For example, OPT-NIFTY-24-Nov-2016-7900-CE is selling at 8.35 premium. (down -16% today).

My question is, if someone buys at 3pm, then what is their strategy? To sell the same to someone else within 30 minutes?

Is it like passing a hot potato and hoping to make profits in the process?

 

[kharikumaar]

Continuing further on the enquiry, i have seen buying and selling of worthless options even during the last seconds -- after 3.29 PM on expiry day. here i have some doubts if anyone can clarify.

Why would someone buy options at .05 / .1 Rs , which is going to expire worthless in a few seconds anyway. it cannot be the sellers who would stand to gain by letting it expire wherein they will gain that additional amount and save on brokerage also.

why would someone buy these even for a gamble when there is no chance of a heavy movement in the last few seconds.

I have always wondered on these, if anyone has some knowledge/ idea , would be glad to know

hari

 

[tradedatrend]

could be a game for ATP

beside it when you see such instances, take a screeshot alongwith a screen shot of nifty future price and post here,

without knowing exact future price and strike price, nothing can be determined

BTW you didn't clarify about Nifty 7900 CE Nov at Rs. 8.35 issue?

Continuing further on the enquiry, i have seen buying and selling of worthless options even during the last seconds -- after 3.29 PM on expiry day. here i have some doubts if anyone can clarify.

Why would someone buy options at .05 / .1 Rs , which is going to expire worthless in a few seconds anyway. it cannot be the sellers who would stand to gain by letting it expire wherein they will gain that additional amount and save on brokerage also.

why would someone buy these even for a gamble when there is no chance of a heavy movement in the last few seconds.

I have always wondered on these, if anyone has some knowledge/ idea , would be glad to know

hari

 

[kharikumaar]

could be a game for ATP

beside it when you see such instances, take a screeshot alongwith a screen shot of nifty future price and post here,

without knowing exact future price and strike price, nothing can be determined

BTW you didn't clarify about Nifty 7900 CE Nov at Rs. 8.35 issue?

wasn't me who wrote about that, and what i mentioned happens on all OTM contracts and happens all the time. and how is it a game of ATP on a useless option

 

[travi]

If I can say that it is plain foolish to buy 0.05 options and hope it jumps is very true
It is only bcos I'v seen jumps, I'v had a 0.5 jump to 7.3 and make money.
So each time in expiry, since there is Lakhs of OI to expire, the few thousands you see, like the old me, are betting on it.
Its only later, that you learn that it doesn't happen all the time
My o.05 has jumped to 0.5 - 0.7 on 3 occasions out of many.

Every one can on few days in a month gamble on Inr. 1-2k and expect it to loose 90% of the time.
Its all idiots some times, and some idiots all the time
No hard feelings for those who do it, just don't aggressively question the logic