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

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.

yes squaring is allowed.

law of the land says compulsury sqare off. no delivery

no problem

no, you do not need to hold the security. you only pay the premium.

even if you pay .05% as brokerage you end up paying Rs.100+tax as brokerage on each leg (considering each contract size is of Rs. 2 lakhs, which is the minimum). all the brokerage you have named are reputated. you only need to compare their brokerage structure. even a paisa matters.

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.

no need to thanks the plesure is mine.

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.