What Happens on option Expiration day

#1
I have sold call 8800 and Put 9200 at nifty spot 9000

Nifty spot closed at 8900 on expiry day

If I keep holding Put and call and don’t square off, after the market closing on expiry

What Happens?

1) how much will get back ?

2) Will I have to pay STT?

Plz clarify.
 

ram2010

Well-Known Member
#2
I have sold call 8800 and Put 9200 at nifty spot 9000

Nifty spot closed at 8900 on expiry day

If I keep holding Put and call and don’t square off, after the market closing on expiry

What Happens?

1) how much will get back ?

2) Will I have to pay STT?

Plz clarify.

first clarify, whether its 8800 put and 9200 call?

correct way is to sell 8800 put and 9200 call- both will go to zero if nifty expires at 8900.

you can simply sleep, if the above situation happens and the complete premium you received at the time of selling (* lot size), will be credited to your trading account at the end of expiry day.
 
Last edited:

Riskyman

Well-Known Member
#3
I have sold call 8800 and Put 9200 at nifty spot 9000

Nifty spot closed at 8900 on expiry day

If I keep holding Put and call and don’t square off, after the market closing on expiry

What Happens?

1) how much will get back ?

2) Will I have to pay STT?

Plz clarify.

Did you mean you sold 8800 put and 9200 call?? I cant think why you would sell a 8800 call and 9200 put unless you were smoking something really nice. Please send some my way too!:D
 
#5
Did you mean you sold 8800 put and 9200 call?? I cant think why you would sell a 8800 call and 9200 put unless you were smoking something really nice. Please send some my way too!:D
Nothing wrong in selling 8800 call and 9200 put when Nifty was 9000 if the view was that the nifty will stay in the range of 8800-9200 so that the time value premiums on both the contracts could be pocketed on expiry.

Smart_trade
 
#6
I have sold call 8800 and Put 9200 at nifty spot 9000

Nifty spot closed at 8900 on expiry day

If I keep holding Put and call and don’t square off, after the market closing on expiry

What Happens?

1) how much will get back ?

2) Will I have to pay STT?

Plz clarify.
1) On 8800 call you will loose 100 points and on 9200 puts you will loose 300 points so total you have to give back 400 points out of the options premiums you have received at the time of selling these contracts.You must have collected more than 400 points and this difference is your profit to keep.

2) Both contracts are In the Money ( for buyers) so they will be automatically and compulsorily excercised by the Exchange on expiry day. No STT is payable by you as STT is payable only on sale of options ( and your trade will be buy of both these contracts ) Your counterparty or buyer will pay the STT.

3) If the In the Money buy position is excercised by the exchange then STT is payable on the strike price + premium .

Smart_trade
 

Riskyman

Well-Known Member
#7
Nothing wrong in selling 8800 call and 9200 put when Nifty was 9000 if the view was that the nifty will stay in the range of 8800-9200 so that the time value premiums on both the contracts could be pocketed on expiry.

Smart_trade
Of course nothing is ever wrong. Each one to his own. The reason why i asked him what he was smoking was because he asked " What Happens? 1) how much will I get back ?" is as good as walking blind. We all learn by making mistakes. But to write options without knowing what consequences will be, is risky.

As an example, If his view was that Nifty would expire at 9000 and had he sold 8800 Pe and 9200 Ce both would have expired worthless. With 8800 ce and 9200 pe being sold, if nifty expired at 9000 would they expire worthless??? I admit that its his perception of R/R. But why do something you are unsure of?
 
#8
I have sold 5 lot
mar15 call 8800 - Rs 255
mar15 Put 9200 - Rs 300

current price is
mar15 call 8800 - Rs 233
mar15 Put 9200 - Rs242

so profit is call 22 + put 58 = 80 x 125 = 10000

i am new trader so just ask

if any thing wrong please tell me so i will exit
 

Riskyman

Well-Known Member
#9
I have sold 5 lot
mar15 call 8800 - Rs 255
mar15 Put 9200 - Rs 300

current price is
mar15 call 8800 - Rs 233
mar15 Put 9200 - Rs242

so profit is call 22 + put 58 = 80 x 125 = 10000

i am new trader so just ask

if any thing wrong please tell me so i will exit

So long as you are making money, you are always right. Question a trader has to ask himself all the time is " what will be the cost of being wrong?". So long as you understand where you stand, you will do well.