Brokerage for letting Options expire worthless

  1. If in Expiry I let Options expire worthless and dont square them off, would there still be a brokerage charged ?

  2. If in Expiry I let Options is about to expire worthless do I need to squre if off say at 5 or 10 paise or can I let it just expire and do nothing ? Or would I be penalised if I do not square it off ?

  3. And from brokerage point of view which is better ? - to square it off or let it expire on its own

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Thank you for your reply

So I gather two things from it

a) As a seller if the option contract is out of the money, I do not have to do anything

b) I square it off before expiry, or I let it expire worthless - there is no difference in the brokerage as its not charged for the squaring off ? I am charged brokerage only when I sell (short) options not when I have to buy it back . Am I right in my understanding ?

There is no penalty for letting your Option expire. If it is OTM, it will expire worthless and if you are a option buyer, you will lose the premium paid. If you are a option seller, you will get to keep the premium recieved.

Also, if Option expires OTM there is no brokerage applicable as it will expire worthless.

As explained above, brokerage will not be applicable if your Option position is OTM as it will expire worthless. But if you are squaring-off before expiry then brokerage will be applicable as usual.

Thank you for your reply
So from now onward if the Option is expiring worthless I will let it expire (not to try to square it off for 5 or 10 paises) as that will save my brokerage

So suppose I initiate a short strangle & allow it to expire on its own.
I need not pay (20+20+20+20=80 Rupees) as Brokerage .
Can someone clarify this??

And this [Auto square-off ] " Why did Zerodha square off my position? " charge isn’t applicable right ?

Brokerage will be applicable when you take the position.

On expiry day, if the Option expires ITM, brokerage will be applicable. If the Option expires OTM, it will expire worthless and brokerage will not be applicable.

If position is in intraday and even if it is OTM. Zerodha will try to square off and take brokerage

Hey @ShubhS9

Could you shed some light on this.
“THANKS IN ADVANCE”

If I took the following Position Today (09:40 02-Dec 2021).
Today is Expiry day.

Allowed the position to expire on its own.

So based on the information you provided on my previous message

  1. Position taken is intraday {So it’s not POSITIONAL trade}

  2. Position expired OTM

So (40+40+40+40=160 Rupees) brokerage will not be applicable.


You would’ve added values in both Buy and Sell columns on brokerage calculator. For the Options that are expiring OTM, keep one side blank, ie. Sell column for Options bought and Buy column for Options sold.

Zerodha did not let my options expire worthless.
Zerodha squared off my 3 positions of my 4 positions before 3:30 PM.
Had to pay ₹140 Brokerage.

Q). Why did Zerodha Square off positions before expiry ?

My Trades:

My Contract Note:

@ShubhS9

Looks like you took position using MIS product type. This is an intraday product, if you have any option positions in MIS, and have not squared-off by cut-off time, these will be auto squared-off. You can check out more details here.

To let your positions expire on the expiry day, you need to take positions using NRML product type.

OK Thanks for the reply

@ShubhS9

" Zero brokerage if options expire in OTM "

  1. Does the same apply for USD-INR options too ?

  2. I know following question digresses from the topic ; Nevertheless
    I know USD-INR pair is not as liquid as Nifty or Bank Nifty.
    I just wanna get a sense of how illiquid.
    Can we trade 20-30 lot without any slipping ?
    If not can we trade atleast 5 lots ?

Thank You

Yes.

Best to check the bid/offer prices in the market window before placing the order for better sense of liquidity.

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