Ranbaxy -- opportunity

[abhi_j]

Hello even a couple of things can be done for example buy future september 365 sell call 105 sell put 380/ 137 and buy call 500 15.5 now if for eg if call is exercised at 550 u will loose 45 rs right but u have 500 call where u will earn 35 rs and even u can get the better rate than 400 call as it will be exercised whereas u can square it in market u will even earn in the put u have sold and for protection we can buy a put of 350 also so to make it totally hedged there is even a chance that future can fetch u some money if it moves for eg if it goes to 380 etc and if nothing of this happens and ranbaxy goes down still its good for us
please give me views friends

sorry after writing the quote i read if the stock falls the next day 20 to 30 rs its than the luck if u see that the liqudity is drying than u can guess the call will be exercised if lucky u can close the position same day

 

[mandot]

Realy nice information. I used to think that options will be excersied (force by exchange) only at the time of expiry. This means that we must avoid writing call especially in ranbaxy case as manipulation seems to be the case. Some operators may jack up the spot price and then excercise the option.
Well can anyone tell that in trading we see that if there are no buyer at our price then our quote remains unused, similarly if there are no seller at our price then our quote of buy not used then how people will excercise option before expiry of contract.

 

[columbus]

Ranbaxy appears to be weak on charts though the volumes are more or less in tact.

 

[AW10]

Option buyer has the right to excercise at any time. Method of excercise depends from broker to broker. Some provide online button (like ICICIDirect) where you can place order to excercise the options in your hand. For others, (like sharekhan) you have call them after 3.30 pm and give instruction to excercise the option.
On any day of the month, return from excercising the option is = Market price - Strike price for call option or =Strike price - Market price for put option.

On the day of the expiry, Exchange will excercise automatically all In The money options.

Happy Trading

 

[mandot]

Thanks for the knowledge about getting options exercised. Is it true that Index options in india are european in nature and cannot be exercised before expiry of the option???

 

[AW10]

Yes. You are right. Index option can't be excercised. Stock option can be excercised before expiry.
Best part is, in India, options are cash settled.. (i.e. if excercised, then only cash balance of trading account will be impacted. There won't be any DMAT account entry for delivery of stocks).
They are not settled by the delivery of underlying stock which is the case in US market. If option is excercised /assigned then other party have to take or give the delivery of stock.

Happy Trading.