Question about Options Expiry

V

vmanocha

New Member
#1
#1
Hi,

I have been trading in stocks and future for some time now and have also traded in options at times based on broker's advice. However, I haven't understood the options completely. I have a basic question on what happens at expiry time for options purchased. Can somebody explain this in simple english.

For example:

If market(or a stock) is trading at say 4900 at this point, and I buy a call for 5000 for the current month's expiry at Rs 30 (for example).

Q. What will happen if the market closes above 5000 say 5050 at expiry during that month (and I haven't sold the call till that point)? Would I get any profit? How much?

Q. Similarly, what would happen if the market closes below my strike price.. that is, say for example, 4960?

Thanks
 
T

trader.trends

Well-Known Member
#2
#2
vmanocha said:
Hi,

I have been trading in stocks and future for some time now and have also traded in options at times based on broker's advice. However, I haven't understood the options completely. I have a basic question on what happens at expiry time for options purchased. Can somebody explain this in simple english.

For example:

If market(or a stock) is trading at say 4900 at this point, and I buy a call for 5000 for the current month's expiry at Rs 30 (for example).

Q. What will happen if the market closes above 5000 say 5050 at expiry during that month (and I haven't sold the call till that point)? Would I get any profit? How much?

Q. Similarly, what would happen if the market closes below my strike price.. that is, say for example, 4960?

Thanks
Click to expand...
Profit on long call options= Settlement price on expiry-strike price
Loss on long call options= premium paid if settlement is below strike price
Profits on long put options = Strike price-settlement price
Loss on long put options = premium paid of settlement is above strike price.

This is not inclusive of brokerage, STT etc. On settlement if you are going to get money, the option buyer has to pay STT.
 
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