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Educate Option Beginners........

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Old 14th November 2006, 07:53 AM
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Question Educate Option Beginners........

I am new to options!!!....Help needed....Would like to know on excerising an option should I need a whole cash in my account.

say for example: spot price IVRCL 340

I am buying IVRCL-350-dec-ca is 5. ie. 5 x 1 lot = 5000 premium. spot price for IVRCL went to 385 and premium of IVRCL-350 now is 20. I would like to excercise the option, I am not interested to take delivery of the shares. Should I need 3,50,000 in my account to excerise this option or 35000 - 5000 (premium) = 30000 or 35000 - (20000 - 5000) = 20000. (would like to know which amt...) gets credited in my account automatically...(as like daytrading....).
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