I want to know that if I sell put option BANKNIFTY 32500 (expiry 8th April, 2021) today (7th April, 2021), so I receive (25 x 156 INR) right? And I need to have 1,56,000 INR in my account that will be blocked? Now tomorrow (8th April, 2021) if BANKNIFTY close above 32500 I get all the premium? Second question do I need to let it expire or square off before 3 PM? And how will my margin requirement change during this time that is how much more money I need to keep in my account? And if BANKNIFTY close at 30000 what will be my loss?
As I am beginner, please help me in clarifying the doubts. Thanks
Yes, as if Bank Nifty closes above 32500, your Put Option will expire OTM and you’ll get to keep all the premium received.
It’s up to you. If you want to you can square-off your position or even let it expire.
The margin requirment changes according to volatility and price. You can keep around 10% additional margin.
If your Option expires ITM, it’ll be settled at intrinsic value. If underlying closes at 30000 your 32500 Put will be ITM by 2500 points. So your loss will be 2500 * Lot Size.
Would suggest you read this module on Varsity to better understand Options:
Thank you so much for this detailed answer… Great respect☺️… final clarification so loss will be 2500 * 25 INR in this case… I hope my understanding is correct
