Hello everyone,
By mistake I chose wrong expiry on FINNIFTY 19200 CE, instead of DEC I chose NOV. And the bad luck is today is an expiry for FINNIFTY 19200 CE NOV contracts.
What would be the implications if FINNIFTY is currently trading at 19231?
Happened first time with me.
Index F&O are cash-settled. As the option has expired ITM, it’ll be settled at intrinsic value (Spot price - Strike price). Taking the above example, the 19200 CE will be settled by the exchange at Rs. 31.45 (Spot price (19231.45) - Strike price (19200)).
The difference between your buy/sell price and settlement price will be your P&L. More details here: What happens if I don't square off my positions in options? - #2 by ShubhS9
So what value I would be getting back if I had 280 Qty (7 Lots)?
Suppose you bought 280 quantity at 100Rs/- (=28000Rs/-)
Sold or option expired at 110Rs/- (30800Rs/-)
P/L= 2800Rs/-
Or simply multiply the quantity with the points gained or loss.
280x10=2800Rs/-
Loss I know as its shown on the MTM and As I bought it higher and market crashed, but are there any additional charges?
Is there any penalty if you dont square off an ITM option?
For index options there’s no penalty.
If you forgot to square off the stocks options contracts if it turned ITM then you have to take the delivery(can consider as penalty)
Just brokerage and all. Nothing else.
ok what I can understand from your helpful comments and blogs is that, I would be settled as auto-square off with some additional brokerage charges.
And if I am not wrong, if it would have been an OTM strike, I would have lost all the invested money for Index options.
Now that it is ITM, value would be calculated based on LTP of Strike price and Lots purchased, then additional charges would be applied and position would be squared off.
In case of stock options, I am required to take the delivery of the same quantity of actual stocks by paying the actual value of the lot size x quantity x spot price.
Just one scenario I am checking now, what if Stock option is OTM.
I know I am taking a deep dive now that I faced the scenario, its always good to know the implications to avoid serious mistakes. I am saved just because my index option is in the money and not all the invested value is lost.
If stock option is OTM and you forgot then broker will auto square off at 3.25 PM and will charge.(50Rs/- by zerodha).
It is advisable to to square off your stock options day before expiry.
And don’t hesitate to ask about queries, that is what this trading forum was created for.
Any Index strike(ITM/ATM/OTM) you will never lose money you invested.
Profit and loss will be calculated as per your buy & sell price and your funds will be settled.