How to settle Options?

new2sm · #41 1st November 2007, 11:42 AM

except kotak securities interface how-to, reading this thread from beginning will clear all your doubts.

sandeepkrmishra · #42 4th November 2007, 05:11 PM

hell to very body the baadshah of shares is now on the net ask what u want to ask and get free advice.

jaypee · #43 29th November 2007, 01:05 PM

traderji
I am having a doubt in option trading,please clarify it.
my doubt is ,
if i bought a stock call option and does not close my position what will happen after the expiry date? should thy force me to buy or any thing else.

in detail
if i bought reliance call 3050 for rs 3.25,but the expiry date there is no buyer at the same time the spot is 2850.

same doubt in put also. pl clarify

thanks in adv

tassob · #44 3rd January 2008, 04:54 PM

Has strike price has anything to do with squaring/settling of option? I mean if I have bought NTPC CA at strike price of 250 @ 18 can I settle my option if it is selling at 245 in cash market & premium of 14 (even if i am incuring losses)

leo_3455 · #45 3rd January 2008, 05:48 PM

Quote:

Originally Posted by tassob

Has strike price has anything to do with squaring/settling of option? I mean if I have bought NTPC CA at strike price of 250 @ 18 can I settle my option if it is selling at 245 in cash market & premium of 14 (even if i am incuring losses)

Strike price is 250 @ 18 premium, now the premium for strike price 250 @ is 14; the cost price is 245.

Case I: When you exercise your option, your loss will be {(SP + premium) - CP} * lot size (1625); i.e. (268 - 245) * 1625 = 23 * 1625 = 37,375

Case II: You just square off your option and if somebody is there to buy, your loss will be (difference between the premiums) * lot size; (18-14) * 1625 = 4 * 1625 = Rs. 6,500

Go for Case II

Brokerages to be paid in both the cases.

so what did you do?

tassob · #46 4th January 2008, 01:19 PM

Quote:

Originally Posted by leo_3455

Strike price is 250 @ 18 premium, now the premium for strike price 250 @ is 14; the cost price is 245.

Case I: When you exercise your option, your loss will be {(SP + premium) - CP} * lot size (1625); i.e. (268 - 245) * 1625 = 23 * 1625 = 37,375

Case II: You just square off your option and if somebody is there to buy, your loss will be (difference between the premiums) * lot size; (18-14) * 1625 = 4 * 1625 = Rs. 6,500

Go for Case II

Brokerages to be paid in both the cases.

so what did you do?

Thanxs a lot leo. One more doubt pl. u have mentioned if somebody is there to buy, those it mean that i will have to find buyer? Shouldn't the stock exchenge/brokerage firm take care to find buyer while squaring off. By the way NTPC is too hot to be squared off pesently.

rajsingh · #47 4th January 2008, 06:36 PM

Unfortunately there is no market maker system here as there ought to be. Hence the pathetic volumes and liquidity.

coolAbhi · #48 4th January 2008, 07:36 PM

Some newbie questions
-----------
1. Who pays the difference on exercise of a call ???????

2. Is there anything to lose after selling a CALL OR PUT ?????

3. What happens to lots , strike price , call price etc.on allotment of bonus shares ????????

rambharosey · #49 10th January 2008, 11:42 AM

Very informative thread for newbees like me. Most of the recommendations here have been to square off the positions rather than exercise it (primarily because of time decay).

Now assuming that options are not being exercised, does it make any difference whether the option is American or European?

Thanks.

sanjugalande · #50 11th January 2008, 04:43 AM

in india only index are in European option ie CE or PE
for stock options they are american CA OR PA