Options strategy on expiry day

#1
Hi All,

I am researching options and have few queries and a strategy. Please comment.

Example: Nifty value today: 18th Jan 2015 is 8513. Lets take this example.

1. Suppose I sell 8000 PE 1 lot at 10. I get a premium of 25 X 10 = 250. Suppose I do this trade tomorrow.
Can I square this by buying 1 lot of 8000 PE if premium goes down?

My question is basically when I buy option, i can square by selling it at higher premium to make profits. Similarly it is possible to sell option at higher premium and square it by buying option at lower premium?

Now the strategy: Can I sell out of money option on expiry day and make premium as profit? Is not this a sure shot strategy?

Thank You!
 

comm4300

Well-Known Member
#2
1. Suppose I sell 8000 PE 1 lot at 10. I get a premium of 25 X 10 = 250. Suppose I do this trade tomorrow.
Can I square this by buying 1 lot of 8000 PE if premium goes down?
yes.

My question is basically when I buy option, i can square by selling it at higher premium to make profits. Similarly it is possible to sell option at higher premium and square it by buying option at lower premium?
yes.

Now the strategy: Can I sell out of money option on expiry day and make premium as profit? Is not this a sure shot strategy?
OTM options are likely to quote at 1.00 to .50 paisa on expiry day.
and any sudden movement in Index may lead the option price from 1.00 to rs.10-20!

think of risk reward before you sell otm at expiry.
 
#5
Hi Rags_super,
You look like newbie. I would advice you to browse material in forum itself to understand basic concepts in F&O.
Hope you take my words in positive spirit.
 
#6
Hi trader_ks,

Yes, I made my first transaction today :clap:.

I have browsed NSE website etc. Thanks for your suggestion. I will continue to learn and gain more and more knowledge.

I understood that there is no concept of T+2. Only difference If I carry forward options trade to tomorrow and sell is that I have to pay brokerage twice.

Thank You!
 
#9
I mean at closeto expiry for OTM : its pathetic seeing with price moving up call not rising and with price falling call falling UNLESS THERE IS SHARP INCREASE IN SHARE PRICE
 

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