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| Discuss Doubt exercising options????? at the Derivatives within the Traderji.com - Discussion forum for Stocks Commodities & Forex; I had read the thread 'Query regarding Square off' in that page 3 'ivanboesky' has ... |
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#1
23rd April 2007, 08:57 PM
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Doubt exercising options?????
I had read the thread 'Query regarding Square off' in that page 3 'ivanboesky' has written that
"Exercise happens at the end of day price. So better to wait till market closing to decide if you want to exercise or not. Only in-the-money options can be exercised. So if you exercise at 11am and the stock tanks post that, you will not face a loss. Remember, only option buyers can exercise, and their max loss is limited to the premium paid." I have bought Polaris CE 200 (strike price) at premium of Rs.6 (on 19th apr.) lot size=1400 (expiring 26th apr.) today polaris shares were- from 10-11 AM trading between Rs. 201.50-206 from 12AM-1 PM trading between Rs. 202-203 from 2:30-3:30 PM trading between Rs. 198-200 polaris closed at Rs. 198.45. so what i think is, if i had exercised the options between 10-11 AM i would have lost the whole premium. but ivanboesky's (i know he is quite senior than me in options trading  ) statement is confusing me. plz, some1 help it would be good if ivanboesky answers himself. I m really confused. 
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#2
24th April 2007, 10:11 AM
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Re: Doubt exercising options?????
We have not seen Ivan around lately ,but I feel you are confused between squareoff and excercise. You can square off at any time at the quoted premium at that particular time. Whereas excercise will be carried out at closing price of the day.
If your option ends up out of the money (as in the case you have mentioned) the request to excercise will not be carried out. You loose the entire premium anyway ( if excercise is carried out) if you choose to excercise. I hope that clears your confusion. Last edited by vince : 24th April 2007 at 10:19 AM.
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#3
24th April 2007, 11:17 AM
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Re: Doubt exercising options?????
Quote:
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