Option Query

R

rockk

New Member
#1
#1
Hi All,

I purchased one lot of an option on Rmoney for the first time. I want to know if I dont sell the call option before expiry, does it automatically get settled in the end?

Eg: I bought a CA for 50 and Strike price is 1000. If on the last day, the stock price is 1500 and I dont sell and do nothing then will I automatically gain 450?

Please comment.

Thanks,
Rockk
 
T

trader.trends

Well-Known Member
#3
#3
On the day of expiry if the settlement price is above your strike price, you get the difference between the settlement price and the strike price.

If you have bought 1000CA for 50/- and the share ends at 1500 on expiry day your account will be automatically credited with (1500-1000) =500/-. You cost of buying 50/-. Your net profit 450/-. If it ends below 1000, you have to pay nothing and do nothing.
 
MurAtt

MurAtt

Well-Known Member
#4
#4
Corrections in previous Answer inline in Bold

trader.trends said:
On the day of expiry if the settlement price is above your strike price, you get the difference between the settlement price and the strike price.

If you have bought 1000CA for 50/- and the share ends at 1500 on expiry day your account will be automatically credited with (1500-1000) = 500/-. Your cost of buying 50/-. Your net profit 450/- x Lot size. If it ends below 1000, you have to pay nothing and do nothing.But you lose the 50/- x lot size which you have already paid for.
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