----->>How profit calculated in options on expiration?
i know when you square off before expiration day. Profit is calculated as Premium received-Premium paid=gain/loss. How about excercising on expiration day? How its calculated?
----->>do you have the option of both square off and excercising in expiration day?
Can i square off if it is more profitable?
Option Settlement on expiry (exercising): You paid some premium to buy an options lets take it as 30 rupees The option you have bought is having strike price of 2500 for example. When the option expires (after the closing of market on expiry day), the closing price will be settling price. If closing price is 2618 for example. Then your profit is calculated as 2618 - 2500 -30 = 88 rupees. Having said this you need to pay a higher STT when compared to squaring off options which you have bought.
Options square off before expiry: Yes you can square off, if your option is making profits, you need to do it before closing of trading hours on expiry day. STT will be comparatively less.
@astro Sir how to calculate time decay…