What will be the price of illiquid option ?

[mmca2006]

I bought 530 call option of Asianpaint currently which is very much illiquid , last traded price is 38 , bid /ask is 5/49 , now if I donot sale it and keep it up to expiry AND 38 remains last traded price ,also suppose at june14 expiry price of Asian paint underlying is 580 /- , what price exchange will credit me --- Rs. 50/- (580-530) or 38/- ( last traded price) ? please guide.

 

[amrit]

it will be rs 50/- but u will have to pay heavy stt charges if it is exercised without squaring off at expiry.

 

[trader_ks]

Stt before expiry .85x50x500=21.25 rs
after expiry (530+50)×500×.125=362.5 rs
assuming closing at 580

 

[toughard]

it will be rs 50/- but u will have to pay heavy stt charges if it is exercised without squaring off at expiry.

the word "heavy" is bit excessive for Pro option traders this is very normal as its better than slippage exit!
As trader_ks is rightly calculated Rs.365 for a profit of 6000 is nothing:thumb:

 

[trader_ks]

I use to pay this heavy STT most of the time. Reason being that I use to hold my option positions from start of the series till end of series if stock is trending.
Toughhard rightly said that in deep ITMs slippage is more then STT.

 

[tu1122shar]

can exchange auto squareoff that illiquid option

 

[trader_ks]

Yes.
On expiry ITM's are squared off automatically. Drawback is high STT.

 

[tradedatrend]

I bought 530 call option of Asianpaint currently which is very much illiquid , last traded price is 38 , bid /ask is 5/49 , now if I donot sale it and keep it up to expiry AND 38 remains last traded price ,also suppose at june14 expiry price of Asian paint underlying is 580 /- , what price exchange will credit me --- Rs. 50/- (580-530) or 38/- ( last traded price) ? please guide.

Let it be expired and square off by exchange.

You will get : LTP on expiry date - strike price (you need to calculate broke and tax etc to arrive on actual profit)

In case sometime you are afraid that market might comedown, the just sale equal nos of lot of future at CMP, and just wait till expiry, and your profit earned till that time shall be locked.

You can do vice-versa in case of put.