need help on icicidirect call options

#1
Hi All,

Greetings.

I am a newbee and need some help with Futures and Options.

I use icicidirect.

I have bought a call option for for ICICIBAN with strike price 820
and paid premium of 18 Rs/- for 350 shares with expiry date on 24,june

Now ICICIBAN is trading at 880+

in the open positions icicidirect page has two links
* exercise
* square off.

I know about 'square off' can some one explain me what will happen if
I 'exercise' ? Is it like taking delivery, should I pay 350*820 or
will they move the profit/loss after trading it on current market price
and move the profit/loss alone to my account?

I am confused, your help will be greatly appreciated.

(I tried contacting icici guys, they said, it will be exercised on 24 th june,
and I need 350*820 Rs/- to take delivery... he has confused me further :( )
 

AW10

Well-Known Member
#2
820 call is quoting at 63 rs (next buyer's quote), 70 rs(seller's quote)

When stock is at 880, the 820 call is worth 60 rs.
So when u excercise the option, you will get (settlemnt price - strike price) in return.
Settlement price is given at the end of the day which is close to EOD price of stock.
i.e. in this case it will be 60 rs.

If you place the order to excercise today (before 1 pm or so), it shd be settled at today's settlement price.. Credit of money might take some days (ususally T+2 days)..

All options in India are settled in Cash.. and you don't need to take any delivery.
So in this case there shouldn't be any question of paying full money.

I think, u got wrong customer rep in ICICIDirect.. can u plz call them again and talk to some other guy. Maybe ensure that u are talking to someone who can answer F&O questions correctly.

Regarding selling in mkt directly, you will get 63 rs or whatever is correct mkt price quoted by next buyer in queue. It is better to go thru squareoff.. cause u get extra time value in your sell price.. which is not the case in exercise.. (e.g. u get 63 from mkt, whereas u will get 60 from excercise)

And excercise also result in higher charges (brokerage etc comapred to squareoff).

Hope this helps.

Happy Trading
 
#3
Thanks :clap:

Your explanation helped me :D

I am fed up with icici guys, first I called thru their mobile help line,
then went to near by bank, then contacted some icicidirect relationship guy...

no one explained the above simple query properly (assuming I ve decent IQ level to understand!).

Thanks for your time & help :clapping:
 
#4
Here is the update on trade :)

I squared off the call option for 85/- which I bought for 18/- Rs !

I bought a lot of 350 shares !

profit =23k+ INR and thats sweet !

Thanks once again !

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