Options on Expiry Date

S

sivasubbusn

Member
#1
#1
Dear Gurus,

This is the question hovering in my mind for a long while and thought of getting answer from you guys atleast today.


1. What will happen to the options on expiry date ?
-- For ex. I bought UCO Bank 110 PE and didn't squared off even on expiry date. What will happen to both buyer and seller ?

2. How different type of option contracts will be treated on Expiry Date (Un-Squared)?
--Like ITM, ATM & OTM -- Call and Put options.

I would request you to clarify my doubts for the benefit of other members too.
Hope, most of the members would be having this doubt.

Thanks - Siva
 
S

sumeetsj

Well-Known Member
#3
#3
sivasubbusn said:
Dear Gurus,

This is the question hovering in my mind for a long while and thought of getting answer from you guys atleast today.


1. What will happen to the options on expiry date ?
-- For ex. I bought UCO Bank 110 PE and didn't squared off even on expiry date. What will happen to both buyer and seller ?

2. How different type of option contracts will be treated on Expiry Date (Un-Squared)?
--Like ITM, ATM & OTM -- Call and Put options.

I would request you to clarify my doubts for the benefit of other members too.
Hope, most of the members would be having this doubt.

Thanks - Siva
Click to expand...

If the option expires in the money then the buyer will get the credit of closing price-strike price. And Seller will have to pay that much money.

If the option expires out of the money there is a full premium loss to the buyer(whatever premium he has paid for the particular option) and a full premium profit to the seller(whatever premium he has collected from the buyer).

Its the same for both calls and puts.
 
A

AW10

Well-Known Member
#6
#6
In reality, Does option expire ATM ? Imagin settlement price being exact 5900, 6000 or 6100. I have yet to see such a precise closure of market.

Theoratically, ATM options are also worthless and they go in the bin. But if they are settled even 10 paise ITM, then we end up paying lot more in stt and other taxes.

happy trading
 
S

sumeetsj

Well-Known Member
#7
#7
STT charged is 8 times of normal if you let the ITM option expire. And rightly said by AW10 that any probability of ATM expiry of any option is very less.
 
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