Expiry Day Option Buying

General
1

Respected all,

On Expiry day, if I bought a CE and not square-off the position, what happen?
Means by 3:30 it got zero, what happen next?

For example -

If I bought a CALL at Rs. 3 for a target of Rs. 10, (I hold it - not square-off the position), then it comes down to Rs. 0, what happens next ?

Does my position will get automatically square-off by exchange or broker or what happens next?

Awaiting Reply

Thanx

Suhas

2

Hi @SK70

The option expires worthless and you lose the entire amount that you paid as premium.

More reading on this topic : Options Theory for Professional Trading - Varsity by Zerodha

3
  1. At 3.25 PM your broker will automatically square off the positions.
  2. If you were a buyer for that option, you will lose the premium when it turns to 0.
  3. If your were a seller for that options, you keep the premium when it turns to 0.

Note:-

  1. Your broker will automatically squareoff the positions on expiry whether it’s MIS or CNC because they going to expire on same day.
  2. Your broker will automatically squareoff the positions everyday if it’s MIS. (Always confirm your positions as CNC before 3.25 PM if you want to carry forward.
4

I do not think Zerodha will close your CNC position for BUY Option Contract.

5

For same day expiry it’s automatically going to square off.
If you bought an option for next expiry they will not squareoff CNC order as it’s simply saying you want to carry forward it for the next day or till expiry.

6

Thank you all for response / reply.

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7

An option contract with an intrinsic value of zero is known as an at-the-money (ATM) option. If the market price is equal to the strike price for a call option on the Nifty, it will be an ATM. The time value will make up the entire value of the option because the intrinsic value is zero. You are not required to fulfil the contract in the case of options contracts. As a result, the contract simply expires if nothing is done with it before the expiration date. The seller forfeits the premium you paid to purchase the option.

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