Advice on Exercising HeroHonda Options

savkar

Well-Known Member
#1
Hi friends,
Being a newbie in options, i need some expert advice from the knowledgebale boarders here.

I need some advice on exercising my hero honda options.
I have bought one lot (200 units) of hero honda april american call option with a premium price of 50 per unit. strike price is 2000

13th Apr is the record date for bonus. with the assumption that the price might reach around 2100 or more, will it be advisable to exercise the option before 13th april, hold the stocks and sell it on 13th/14th april ? will i get bonus + profit in stock rise.

Other queries are:
Can i exercise part of the option. Like can i exercise just 50 of the 200 units.

Also how much time does it take between exercising and obtaining delivery of the shares.

Am i risking too much here? Any pitfalls would be highly appreciated

Thanks for the help :)
 
Last edited:
#2
Hi friends,
Being a newbie in options, i need some expert advice from the knowledgebale boarders here.

I need some advice on exercising my hero honda options.
I have bought one lot (200 units) of hero honda april american call option with a premium price of 50 per unit. strike price is 2000

15th Apr is the record date for bonus. with the assumption that the price might reach around 2100 or more, will it be advisable to exercise the option before 15th april, hold the stocks and sell it on 15th/16th april ? will i get bonus + profit in stock rise.

Other queries are:
Can i exercise part of the option. Like can i exercise just 50 of the 200 units.

Also how much time does it take between exercising and obtaining delivery of the shares.

Am i risking too much here? Any pitfalls would be highly appreciated

Thanks for the help :)

part excercise cannot be done...u have to sell only on per lot basis...in india, only cash settlement and no delivery settlement...bonus shares or stock split will be adjusted accordingly...ur lot size will be changed automatically by exchanges...hope i cleared all doubts...
 
#3
it's advisable not to exercise options if liquidity is there...if there are few or no buyers and sellers, then go for exercise...if liquidity is there,then square it off at market or limit price...


part excercise cannot be done...u have to sell only on per lot basis...in india, only cash settlement and no delivery settlement...bonus shares or stock split will be adjusted accordingly...ur lot size will be changed automatically by exchanges...hope i cleared all doubts...
 

savkar

Well-Known Member
#4
part excercise cannot be done...u have to sell only on per lot basis...in india, only cash settlement and no delivery settlement...bonus shares or stock split will be adjusted accordingly...ur lot size will be changed automatically by exchanges...hope i cleared all doubts...
Thanks DDK. I did understand major parts.
So what i understand is i cannot convert the option to delivery of shares right ?
In that case what is the meaning of "exercise" link at my broker site (ICICIDirect)
 
#5
futures or options-everything is cash settled in india unlike western countries...u cannot take delivery...though u can realize profit by squaring off ur options and buy fresh in equities...weird isn't it...but that's the way it is...
In some strike prices of individual companies, the liquidity wont be there...so the exit strategy is exercise...exchange will settle in cash ...diff bet strike price and equity price at the time of exercising...u can exercise options of individual companies on any day any moment...but for indices such as nifty where there's always liquidity,u can exercise only on expiry day...


Thanks DDK. I did understand major parts.
So what i understand is i cannot convert the option to delivery of shares right ?
In that case what is the meaning of "exercise" link at my broker site (ICICIDirect)
 

Capricorn

Well-Known Member
#6
futures or options-everything is cash settled in india unlike western countries...u cannot take delivery...though u can realize profit by squaring off ur options and buy fresh in equities...weird isn't it...but that's the way it is...
In some strike prices of individual companies, the liquidity wont be there...so the exit strategy is exercise...exchange will settle in cash ...diff bet strike price and equity price at the time of exercising...u can exercise options of individual companies on any day any moment...but for indices such as nifty where there's always liquidity,u can exercise only on expiry day...
It will be at the closing price of that day.
 

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