hi seniors,can u guys plz clarify my doubts in options

#1
hi Masters & Seniors,

I m Prakkash, I m completely new to this hope i will learn a lot here and start my journey in the world of stocks and options.

My main interest is in options.

I have some doubts in Options.Could u guys plz take some time to clarify them.
Q1. can i buy and sell a call option(Call America)contract on the same day ?

(ex: If i a buy a call CA of xyz company with a strike price of 120 at 10 am on monday morning with a premium of Rs2.20 say lot of 4124.The premium rised to Rs3.20 same day can i squeare off on the same day and make my profit of rs 1 on each share i.e Rs4124*3.20-2.20=Rs4124 or should i wait for some period)

Q2. If i sell the call Option (square off ) only to make the money in price rise of premium,will i be obliged to deliver the shares to the buyer of my Call option?

Q3. why some contracts BSP and BBP will have wide gaps ? ex BBP=6 BSP+12.30. Should we avoid such socks ?

Q4.how doe we intreprete Open Interest shouldit be high or low ?

Please clarify my above doubts.
Thanx in advance
Prakkash
 

rkkarnani

Well-Known Member
#2
hi Masters & Seniors,

I m Prakkash, I m completely new to this hope i will learn a lot here and start my journey in the world of stocks and options.

My main interest is in options.

I have some doubts in Options.Could u guys plz take some time to clarify them.
Q1. can i buy and sell a call option(Call America)contract on the same day ?

(ex: If i a buy a call CA of xyz company with a strike price of 120 at 10 am on monday morning with a premium of Rs2.20 say lot of 4124.The premium rised to Rs3.20 same day can i squeare off on the same day and make my profit of rs 1 on each share i.e Rs4124*3.20-2.20=Rs4124 or should i wait for some period)
Yes, you can do it!! Its as simple as buying a stock and selling it the same day.

Q2. If i sell the call Option (square off ) only to make the money in price rise of premium,will i be obliged to deliver the shares to the buyer of my Call option?
Till date all Options are cash settled in India!! There is no delivery involved, i.e. to say you only pay the difference of the strike price and Underlying price.

Q3. why some contracts BSP and BBP will have wide gaps ? ex BBP=6 BSP+12.30. Should we avoid such socks ?
Again it is like stocks. Illiquid stocks have a larger spread. In Options where you find such big difference in Best Buy and Best Sell Price, you will notice that there is either no activity or trades being carried for just a few lots. Yes , its better avoid such options. In fact largely all stock options, barring a few are liquid.
Nifty Options are most liquid.
Q4.how doe we intreprete Open Interest shouldit be high or low ?
Sorry, No idea

Please clarify my above doubts.
Thanx in advance
Prakkash
Trust a few things are clarified.
 

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