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#1
20th October 2005, 12:54 PM
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In the money option
Hi,
I bought allahabad bank 90 PA some days back for premium of 3.95. Spot is now at 81. But the bid/offer price is at 2.5/11.5 and quantity traded is 0. Do you think i will get a better selling price ? What would happen if i hold it till expiry. Appreciate any replies. Thanks 
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#3
21st October 2005, 12:49 AM
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Re: In the money option
The illiquidity is the biggest concern for options traders, especially when the option goes deep in the money or deep out of the money.
Since it is an American style option, you can exercise the option, and in this case would receive Rs. 9 for it. If you hold it till expiry, you will be running the risk of the price bouncing back above the 90 level, in which case you may have to book a loss, or let the option expire worthless.
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#4
22nd October 2005, 03:29 PM
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Re: In the money option
Can we exercise the option before the expiry date(last thurs day)for contracts "In the money".In the given example,suppose one waits till the expiry for in the money contracts,would the difference in price be credited?If so,what would be the applicable price,whether last price traded or average price after the market as indicated.What is the procedure for exercising the option before expiry.
Shall be grateful for reply ranga
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#5
27th December 2005, 10:30 PM
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Re: In the money option
Any REPLY Please ? I have sold a SATYAM DEC2005 700 CA @Rs.20 when the price was 720 . What will the position of this option on end of 29 Dec 2005 trading day if the price closes above 720 ? Are the options compulsorily settled on setlement price or on close price of underlying ? Experienced OPTION PLAYERS , put some light on this .
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#6
28th December 2005, 12:58 AM
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Re: In the money option
Quote:
The options are compulsorily settled on the closing price of the underlying. However, if someone exercises the 700 call option tomorrow and you are assigned, (assignment is done by the computer randomly) then you will have to pay according to the closing price tomorrow. Hope this helps Regards, Karuna
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#7
28th December 2005, 07:32 AM
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Re: In the money option
Quote:
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