Gold options settlement query

Commodities
1

I have taken 2 spreads in Gold Jan Futures expiring tomorrow.

1 GOLD 160000CE @920
-2GOLD 161000CE @743.5
1 GOLD 161300CE @344

From these positions it can be said that I will be in profit even if gold rallies or falls and overall I am getting premium and all these are OTM as per friday’s close.

But todays move take gold to 5100+ meaning these strikes will be CTM or even ITM if more upside till expiry. The concern however I am having is their settlement.

If the options goes deep ITM that is if gold touches 163-164k then all will be deep ITM and we all know how difficult is to square off ITM options. While I am confident that I can easily square off my 160k CE and 161K CE positions as they are round figures and will have liquidity, the main issue is 161300CE. If gold touches 163k, i may not get buyer of 1700 points.

So i was thinking whether I can leave my 1 short position of 161k CE and 1 long position of 161300CE and let them settle. In that case what would be the exact charges on the trade. Because in equity options it is 0.1% of total value and total value usually comes to 10-15 lakhs. But in this case total value will be 3.2 cr, so as per my calculations it will be 32000+GST. Is my calculation correct? Is it better to square off positions giving away 50-100 points discount on market rate or let them expire on their own. Kindly suggest.

2

My guess is

0.01%(CTT)
x 100 (Lot size)
x 2 (Number of lots that devolves into futures short)
x 185000 (Settlement price)

+ GST

3

You may not need to worry about sqaring off, as your net exposure will be zero if all expire ITM.
All the contracts will be devolved as per the future prices. No risk of Bid-Ask spreads.

I am not sure about the margin requirements and charges though.
Cheers!

4

In goldm expiry i am also stuck in similar situation. Yesterday i made debit spread by purchasing 163000ce and selling 163700ce both 1 lot. Now both are deep ITM with huge spreads and huge volatility, i fear if I am exit one leg and unable to exit leg due to sudden movement, then 700 points which is maximum profit of my spread will be wiped out. So i am thinking of letting them expire and net off against each other.

From the link shared above, i did some calculations. Assuming settlement price to be 178000. Then charges will be 178000×1 lot× 10 quantity× 0.01% which comes out to 178rs + gst.

Is my calculations correct. Anyone please clarify. If charges are more then i will try to square off positions

5

Anyone?

6

Hi,

The CTT calculations are correct; apart from that, there will be regular brokerage and charges.