How to buy back a shorted put option ?

[arbharath]

Will somebody give me a solution:

I had shorted 2 lots of bajaj hindustan 195 put option (I wanted to short 175 put and by mistake got it executed as 195 put) for Rs.10/-. I have been trying every day to square it off thro' exercise at the end of every day but the order is turned down saying... 'there are not enough long orders to exercise'.

Is it that I have to wait for expiry for the exchange to square it off ?

Regards
Bharath

 

[AW10]

If you have shorted the option.. i.e U have sold the option.. then u can't excrecise it.
Only the option buyer has the RIGHT to excercise.. not a seller.
By selling, you are taking the obligation.

So close your position, rather go to the open position part of your brokers platform
and place order to squareoff the position. You willl get the current price which is going on at that moment for your options.
As you are going to Buy back these options, so look at the ASK Quote/ sell Quote on the screen for this.

Happy Trading

 

[arbharath]

thanks boss

 

[Mthakkar]

Short Selling NIFTY PUT : Quick Question

So close your position, rather go to the open position part of your brokers platform
and place order to squareoff the position. You willl get the current price which is going on at that moment for your options.
As you are going to Buy back these options, so look at the ASK Quote/ sell Quote on the screen for this.

Hi AW10/Ghosh_ak,

I have one quick question on Short selling option. If today I take NIFTY 4200 PUT Sep series at market (CMP:32 ) and then square off towards the end of september. Can I do that?

Unless some catastrophic event, nifty is not going to break to this level. And I observed that normally, towards the end, 4000 or 4200 PUT are being sold at 5 /10 paisa. This way we can make 32*50 per lot.

Can we do this? Or do you see any catch here?

Thanks
Milind

 

[trader.trends]

Re: Short Selling NIFTY PUT : Quick Question

If you are planning to sell 4200 puts at 32, then of course you will get 32-*50 into your account. And if Nifty stays above 4200 you are in profit by 32. You don't even have to square it off. But you have to block a margin of 4232*50*12 percent or whatever margin your broker charges.

 

[Mthakkar]

Hi Trader.Trends,

I think I did not clarify, what I was trying to say.

I am saying I will SELL 4200 PUT at CMP (i.e. 32) and then buy at 0.5 when it is about to expire.

Well, this is I used to trade for margin when we though a particular share is going to fall.

Yes, I am new to Options, hence the question.

Thanks Trader.Trends,

You mean 32*50*(12 % margin). This is the margin applies to only if I Sell ? Because for Buy option its just premium*50 for a lot.



Thanks
Milind

 

[trader.trends]

I am sorry I did not understand your Q. at first glance. I have since edited my post.

 

[Mthakkar]

Thanks Trader.Trends,

I saw that and hence I edited my response as well.

The question is the
1. You mean 32*50*(12 % margin)?
2. This is the margin applies to only if I Sell ? Because for Buy option its just premium*50 for a lot.

 

[trader.trends]

That is correct. The margin is debited to your account when you sell the option. In addition to that you have to have money for any MTM adjustments that get made at EOD. When you buy of course you only pay the premium. No margin for buyers.

 

[Mthakkar]

But finally I will be charged only premium*50 + brokerage/tax. Whatever margin etc, I will ge back at the expiry or squaring off...right?