Confusion on Option Settlement

Hi All,

I have one query on option

Ex. Suppose I write one call at 5400 + 200 = 5600

& on August last Thursday nifty is 5500

I am in profit of 100 & I am not square off my position which is automatically square off

so How much brokerage I have to give my broker



Santaji

Which strike are you writing .. 5400 or 5600 ?

By 5400 + 200 you mean you are writing 5600 call or do you mean you are writing 5400 call at 200 rs ?

Kindly clear the confusion before which I can explain ....

BUT yes, when you square off then only brokerage is taken from you as per your service provider BUT when exchange exercises the option then you have to pay brokerage on net value i.e expiry value x lot size .. so you end up paying a lot lot lot more.

Hi Boss

Thanks for u prompt reply

My query is Nifty is trading at 5400

&

I write call at 5400+ 200 & collect 200 as premium suppose I have my RK global as my broker, so i have to give 9 rupees per leg + Taxes + STT +++ok

as i searched traderji i come to know it must be around 50 rupees per leg

so once I write a call I will give 50 rupees & when square off again I will shell out 50

1) My query is how much I have to shell out if i am not square off my position
& as u mention Exchange Square off can u pls elaborate what does this mean ?

Santaji

ok

So you write 5400 call option and mkt closes/expires at 5500.
Your profit will be 100 rs. * 50 = 5000 minus brokerage of one leg and minus brokerage from exercise from exchange.

Brokerage from exercise would be on total value 5500*50= 275000/- rs i.e. if you are paying .3% to your broker then .3% of 275000 = 825/- whereas if you square off the call write then you will have to pay only 50 rs per lot or whatever your broker is charging per lot.

BUT just to confirm, visit the thread by AW10 and enquire their ... he will be able to confirm exactly what you are looking for ....

Main thing to note here is STT : In case of Options being exercised, one has to pay STT on the value Nifty close * 50, which come to Big amount.
Someone here on Traderji had sold a Call say of 5000 and allowed it to expire as he could see that it was closing around 4990 , but its actual close came at 5003.... he lost heavily due to heavy STT applicable. (The figure I have mentioned is hypothetical, but his call expired in the money by 2 or 3 rupees) So be very careful.

Visit this link , may help you

http://www.traderji.com/general-trading-investing-chat/36794-stt-charges-fno-expiry.html#post427220

thanks to all

so when I write a call what is my option to settle it, buy back thats it.

Dear All,

Pls go for below link, this is I am afraid of need more clarity plsss share u r knowledge

http://www.traderji.com/options/44242-nifty-aug2010-5500-put-option.html

Regards
Santaji

There seems to be no confusion.. as the qyery was answered there ...
so please be specific what you are confused about.

SM Bhai, Some confusion... If I "write" a 5400 Call and NF closes at 5500, how do I profit.... I am in a loss of Rs.100.00 , isnt it...or am i confused???
Dont think so : Writing = Selling, so the person who bought from me the 5400 Call is in Profit of Rs.100 and not me.