Suppose i bought an call option with an expiry one month after with a premium of 10 rs. .
Now for that particular options the premium went up to 15 rs. . now i want to book profit from the premium which is 5rs. so i sold the options. after selling the options am i liable to settle the option on the expiry date which makes me open to an large loss in case the price of that stock drops? Please remember altough i bought the options i did not have the chance to exercise my buying rights at the first place.
No. Once you squered off your position by selling the option in profit. You are officially out of any obligation of that option contract. You do not need to bear any losses…whatever may be the price of stock at expiry.