Nifty option follows US method or European method?

Hi all,

Please anyone make me clear ......

If we buy a nifty index under call option ....can we sell anytime(US method) before the contract date??? ....or we have to wait for the last thursday(European method) of the month???

Nifty calls can be sold anytime in the market. They cannot be excercised inbetween and excercise is only on last day of the trading cycle.

You seem to be confused about excercise and selling of options. All index options are European type options in India and they cannot be excercised in between but they can be sold in the market anytime.

All stock options are American options,they can be sold or excercised any time.
So try to clear your concpt about selling and excercising of options.

Any option,American or European can be sold in the market anytime and one does not have to wait till last Thursday. The restriction is on excercising,which is different from selling..

Hope the above clarifies your doubt.

Best Wishes,

Smart_trade

Let me make it clear:

US method = exercise any time [all stock options are American, has PA (Put American), CA (Call American), as Option Type],
EU method = exercise only on last day. [All index options are European, has PE (Put European), CE (Call European) as Option Type]

Difference is only with the "exercising power," trading part is similar in both American and European options.

And exercising means, force the contract seller to give you the price difference (as cash settlement is used in India over Delivery based settlement elsewhere).

I got it...thanks a bunch Smart_trade

Thank you fast_rizwaan

Is there a difference in brokergae between the two? Should one prefer exercise over sell if both are equally profitable?

Thx for reply

How To Exercise An Option?
Exercising an option is as easy as clicking a button or a link in your trading interface if you are using an online options trading broker. Clicking that button informs your broker of your intention to exercise an option which then sets off a complex series of actions that we will be covering in a later section below. When you exercise a call option, you will buy the underlying stock at the strike price of the call option. For instance, if you exercise 1 contract of a $40 strike price call option, you would buy 100 shares of the underlying stock at $40 no matter what price it is at the time of exercise. This price is known as the "Exercise Price". When you exercise a put option, you will sell your shares at the strike price of the put options. For instance, if you exercise 1 contract of $40 strike price put option, you would be selling 100 shares of the underlying stock at $40 no matter what price it is at the time of exercise. If you do not have the underlying stock, you will end up with a short stock position. That's right, you cannot exercise an option unless you are the holder of a long position. If you are short an options contract, you cannot exercise the option.

Please take note that only American Style Options can be exercised before expiration. European Style Options do not offer such flexibility. Most exchange traded options all over the world are American Style Options. All publicly traded equities options in the US market are American Style Options as well. Some index options such as the Nasdaq 100 Index Options are European style options.