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| Discuss Doubts on Sqare offing position at the Options within the Traderji.com - Discussion forum for Stocks Commodities & Forex; Hi, pls help me to clear my doubt. Dear Fello boarders, I am planning to ... |
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#1
26th May 2006, 09:15 AM
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Doubts on Sqare offing position
Hi,
pls help me to clear my doubt. Dear Fello boarders, I am planning to deal in Options after loosing heavily in Intrady . Pls help me 1.Is sqaring of position allowed. Consider a Contract Company XYZ Spot 100 Strike 105 Contact Day Jan-1 Expiry Jan-26 Option price 5. Lot 1000 Total Premiun [ (lot * Option price) i.e 1000 * 5 = 5000 Rs] On Jan 1 I have bought a Call by paying premium Rs.5000. On Jan 26 if the Price is 125[greater than a strike price Rs.105] Now I would like to exercise option Here a.Take Delivery and close position If I need to take delivery I need to bring in cash for Rs [1000 * 105 = 1,05,00] then take delivery and sell at 125 and book profit. b.Square Off Here I won't take delivery . I will buy and sell on the same day netting my position.Is this facility Avialable with any brokerage houses [icicidirect,shrekahn,5paisa....etc....] 2.Put :To buy a put option do I need to Hold the security/script in Advance? or Just having the premium is enough 3.Which brokerage hosue is good for DErivatives trade ? Thanking in Advance 
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#2
26th May 2006, 10:09 AM
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Re: Doubts on Sqare offing position
Krishnamruthyu,
You can square off your position at any time. All options are cash settled, even if you exercise you will be payed the difference between strike and settlement price. There is no question of delivery. Buying options does not need security/scrip in any form but for writing options you would need to have margin with your broker. Pls go thru the brokers thread to find yourself a suitable broker.
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#3
26th May 2006, 10:36 AM
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Re: Doubts on Sqare offing position
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the other cons considering the low liquidity a 2 rupess difference in bid ask price is nothing but normal. the slow price movement (for example if the nifty moves by 50 points. the option premium moves a max of 20 pts. a final word, options are best as hedging material. Quote:
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#4
26th May 2006, 08:12 PM
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Re: Doubts on Sqare offing position
Hi Friends,
Thanks a lot for your guide. I am was in a dilemma on this. I am very happy to see such a good response. Once again Thanks a lot.
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