Hello evrybody,
I Sold the box spread of Unitech today with the stike price of 80 and 85. and received the net premium of 5.60 and underlying value is 75.
My trade:
Sell 80 Call @ 5.35
Buy 80 Put @ 8.05
Buy 85 Call @ 3.15
Sell 85 Put @ 11.45
So net credit is 5.60 and strike difference 5 so net income is 0.60.
I have a query here, I have sold the out of the money call at a strike price of 80 and also sold the deep into the money put with the strike price of 85. It is a european option so if any one exeresice the put then how can I earn money and in this situation, what should I do? Is there any risk involve? or should I wait till expiry.
How any one can exersice the option? please explain.
I request the expert to throw some light on this.
Thanks
I Sold the box spread of Unitech today with the stike price of 80 and 85. and received the net premium of 5.60 and underlying value is 75.
My trade:
Sell 80 Call @ 5.35
Buy 80 Put @ 8.05
Buy 85 Call @ 3.15
Sell 85 Put @ 11.45
So net credit is 5.60 and strike difference 5 so net income is 0.60.
I have a query here, I have sold the out of the money call at a strike price of 80 and also sold the deep into the money put with the strike price of 85. It is a european option so if any one exeresice the put then how can I earn money and in this situation, what should I do? Is there any risk involve? or should I wait till expiry.
How any one can exersice the option? please explain.
I request the expert to throw some light on this.
Thanks