Stock Options

Hi, if I sell stock options, and it gets exercised, what happens in this case? How do I know if it has been exercised, and what does the broker do in this case? Also, how is the STT applied in this case?

Thanks.

Hi

Edit : You can be exercised in different ways and here I speak about a worst case, as I do not know clearly, which kind of exercising you speak about as your post not gives specific details.

Normally you have to deliver your shares, as you you sold the option or you have to bring the money.

How do you know if this happen ?

Normally you get a call from your broker ( No idea how it is done in India ).

There is one rule in trading ( This rule does not belong to any market !! It belongs to ALL markets where ever ) : NEVER get a margin call from your broker and here you speak about some kind of a margin call.

You have to deliver some thing to your broker and this are shares or money in such a situation.

Take care

DanPickUp

In India, there is no need to deliver shares if Stock Option is exercised before expiry. It is all cash settled. Anyway, it doesn't really matter since Stock Options will be converted to European in NSE from Jan 2011 so exercise can only be done after expiry.