Hi Mani,Email Query from Anubrotho
I have one doubt regarding option on expiry that. What happen when I dot square off my option on expiry day. For eg FOR XYZ 1000 CE - 100 (CMP) and on expiry day XYZ 1000 CE- 200 and current underlying value of the stock is 1100.
So on expiry that will it get squared of automatically ? What value i will be getting for that option ?
on the day of expiry, only intrinsic value will be left ....
So, if stock price is 1100 and you do not square off 1000 CE, you will be settled (1100 - 1000) = 100
If current ubderlying value of the stock is 1100, then current market price of 1000CE option should be greater than 100 rupees, say 103, If you buy this option at 103 and on expiry you leave this option to expire by itself without squaring off. Assume on expiry evening the base price gets settled at 1205.
The settlement will take place at 1205-1000 = 205 rupees as your credit.
But already you have purchased the option at 103, so your net profit is 205-103=102 rupees x number of lots x no.of shares per lot. This would be your profit, you need to subtract brokerage charges.
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