GOLDM options settlement

Commodities
1

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.

  1. 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?
2

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.

1 Like
3

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?

4

No, only regular brokerage would be applicable.

Yes, you can.
Provided you maintain sufficient margins to hold the positions till the expiry.

1 Like
5

Thank you

6

@Shiva_ms what if one of the position is OTM and other is ITM? Do they get netted off? Looking for cash settled instead of opening future or delivery.

7

@Shiva_ms
If I have a shorted 1 Lot NATURALGAS24FEB200CE at Rs 1 and receive a premium of Rs 1250 let us say this is the OTM contract on the Expiry day.

Actually, on the expiry day, Zerodha will close the position at 9 PM, This is applied to the OTM contract also.
I mean the OTM position will be squared off from Zerodha and Rs50+Gst square-off charges will be applicable or not ?

If Zerodha is not exiting at 9 PM, Then after 9 PM if it is turns to ITM will Zerodha will square off or How it will works?

8

If Zerodha squares off the position then Rs50+Gst square-off charges will be applicable.

So, better to maintain sufficient cash (i.e. margin required) or close the position by yourself.

if post 9 PM it turns ITM then also Zerodha team will try to square off

9

Please confirm, Even if it is an OTM position at 9 PM on the expiry day, This OTM position will be squared off from the Zerodha? or Zerodha will let it expire worthless?

10

If it is far OTM Zerodha team will not square off. we will let it expire worthless. But if it is near OTM (say 4-5 strikes away from LTP) those will be squared off by the Zerodha team

11

So does that mean far otm doesn’t get devolved to future contract and it just expire worthless automatically?