Query - Options!!

#1
Hello,

I have a query.

Say in the case of Nifty options I sell a call option target price 5400 at a rate of Rs. 8 (2 lots - 100). Nifty closes at 5390 at expiry after making a intraday high of 5420.

The last traded value of the option is 9 at expiry.

What happens??.. I loose or gain money if I don't close the order. (Since I have heard that the open orders are closed by the market at expiry at 0 :D).

Thanks in advance.

regards,
 

nac

Well-Known Member
#2
Assuming "target price" is strike price.

If Nifty close price is 5390, you will get to earn Rs. 200/- i.e., profit(((10-8)x2)x50) before brokerage, taxes etc...
 

pakatil

Well-Known Member
#3
Today Nifty closed at 5381.......But Settlement price is 5409. For 5400 Call you will have to pay.....5409 - 5400 = 9 per Lot. Day's high or Option's value at close never matters.

Cheers
 
#4
Wow!! got this perfect in my head now. Thanks a lot.

Please ....and what happens in this scenario on expiry...


Put options target price 5300. Nifty closes at 5390.

2 lots sold at Rs. 10.

Last traded price 3 Rs.

If I square off I get the diff, and what if I don't?

thx
 

niftytaurus

Well-Known Member
#9
Wow!! got this perfect in my head now. Thanks a lot.

Please ....and what happens in this scenario on expiry...


Put options target price 5300. Nifty closes at 5390.

2 lots sold at Rs. 10.

Last traded price 3 Rs.

If I square off I get the diff, and what if I don't?

thx
see simple funda is ...if you are seller of 5300 put...& nifty closes at 5390..u dont have to pay a single rupee on expiry..for buyer ,its worthless...
so see a general concept,say, if nifty close on 5409,so all put of 5400 & below it ..expire worthless..means seller dont have to pay a single rupee...but if u sold call..u have to pay to all the calls which u sold at strike price of 5400 & above ..if u bought it back....the market price..or after expiration..difference of expiration & strike rate....
i hope this explanation will sove ur query..
 

nac

Well-Known Member
#10
Today Nifty closed at 5381.......But Settlement price is 5409. For 5400 Call you will have to pay.....5409 - 5400 = 9 per Lot. Day's high or Option's value at close never matters.
If the settlement price for NF is 5409, then the Nifty close is 5409. I think you're meaning to say LTP is 5381...

Put options target price 5300. Nifty closes at 5390.
2 lots sold at Rs. 10.
Last traded price 3 Rs.
If I square off I get the diff, and what if I don't?
You get to keep the difference, if you do...
You get to keep the money you received i.e. 1000/- if you don't
(before tax, brokerage etc...)

Note: If you let the position to expire i.e. if you don't cover your position, you will be paying a lot under the head "tax"...
 

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