Please give mi answer for zero premium

#1
hello friends i have doubt about options premium.,that is if i brouhgt a call with 1rs premium ,if it goes minus 100% i mean premium is zero before the contract date is it squire off automatically as normal intraday trading ..if the premium once again raising from zero to 1rs .
 
#2
It won't get automatically 'squared-off' till the expiry date.
Another point being, why would the traded-price of option drop to zero?

The option may stop trading, but that's not the same as price zero. And since you're buying an option, margin doesn't come into the picture as well - so no real worries.
 

rajeabc

Well-Known Member
#3
hello friends i have doubt about options premium.,that is if i brouhgt a call with 1rs premium ,if it goes minus 100% i mean premium is zero before the contract date is it squire off automatically as normal intraday trading ..if the premium once again raising from zero to 1rs .
Option premium will not go to zero before expiry date. If premium is zero then there is no incentive for seller so there won't be any trade in that contract. If there is no seller then that contract would be disabled and price would be frozen at the price where the contract was disabled from trading.

Your contract will be squared off on the day of expiry . Ideally if contract premium value if less than the cost of brokerage then you can leave it without squaring it off and can save brokerage charge