I bought Bank nifty options at a premium of 20 R.S, on expiry date it is trading at 500-700 Bid and ask, since the spread was huge, I decided not to sell , In such a case what will be my profit and other charges, Will there be any penalty?
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Hey Rohan,
Firstly that's a big profit man even if you're holding just one lot !
On Expiry, the option you are holding are 'deep in-the-money'. Assuming you don't sell these options for lack of liquidity, these options would be settled against the settlement price of Bank Nifty Index.
For e.g: Assume you are holding 10200 CE of Bank Nifty which you've purchased at Rs.20/- and Bank Nifty expires at 10956. Assuming you have not squared off your position, your account will be credited with Rs.18150 (10926 - 10200 = 726*25[lot size] = Rs.18150) per lot of Bank Nifty held by you.
However since you didn't square off the 'in-the-money' option yourself, you'd have to pay STT @ 0.125% on the Settlement value of 10956 which would be 342.38 per lot (10956*25*0.125%)
So your total profit would be [computer on 1 lot basis]
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Cost of option computed as 20*25 = 500