Hello traders, I am running with a few open positions in GOLDM positions.
What I have learned is that gold option positions will be converted into futures on expiration. What I need to confirm is: do the opposite positions get set off and not result in any future positions?
Ex: How would one ITM call long position and one ITM call short position (of different strike prices) be settled? how the gains and losses will be settled if no futures positions are opened after the netoff.
- Also, are there any extraordinary charges involved in letting gold options settle, or is it advisable at all to leave the gold options open until expiry for settlement?
Correct
Say underlying GoldM closed at 52600Rs
You have a GoldM 52000 CE long (bought at 800Rs)
You have a GoldM 52400 CE short (sold at 300Rs)
Now you left both these positions for devolvement. Both these positions are ITM and it gets netted off.
PNL calculation (This happens on the settlement price of underlying, here its 52600Rs)
Long position: 52000CE buy at 800Rs and sell at 600 Rs i.e (52600- 52000 =600Rs) = 200Rs loss
short position: 52400CE Sell at 300Rs and buy at 200 Rs i.e (52600- 52400 =200Rs) = 100Rs Profit
In Total i.e 200-100= 100Rs Loss.
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Thanks a ton Shiva.
One thing- Are there any extra charges if left for devolvement?
My main concern is - since my bought and sold option is now deep ITM and if I square off before expiry, they are illiquid and there is a high bid ask spread.
Can I peacefully leave them thinking they both will square off at settlement price on expiry and there would not be any extra charges?
No, only regular brokerage would be applicable.
Yes, you can.
Provided you maintain sufficient margins to hold the positions till the expiry.
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