How the nifty option are exercised after expiry

Nifty & Bank Nifty discussions
1

I want to know how exactly nifty option is exercised by the exchange after the expiry, provided that contact is long and In-to-money
Suppose i bought 1500 index at 11300 CE and Nifty Expired at 11450

Will exchange lookout for another buyer at the same strike price to sqaure off my position or exchange will pay it from their own pocket

What if there is no buyer on that particulate strike price is exchange liable to pay money

I heard that after 2019 NSE is calculating STT on Intrinsic value, is that true?
Is there any other tax traps?

Please specify, i’m new to stock market and don’t want to end up in this situation without knowing any technicality

Thanking You

2

Upon expiry if your Option expires Out of the Money it expires worthless, and it it expires In The Money is settled at the Intrinsic Value.

Eg. Suppose you bought Nifty 11300 CE and Nifty on expiry day closed at 11500, your Option will be in the money and it will be settled at Intrinsic Value, which will be 200 (11500 - 11300).

P/L in this scenario will be the difference between the price you bought at and price it is settled at.

Eg. You bought this Option at 100 and it expired at 200, your profit will be 100 * 75 = 7500 (- Brokerage and other charges).

Now the same option 11300 CE, if Nifty on the expiry day closes at 11100, your option will expire worthless (at value of 0).

Here since the Option expired worthless you will lose the entire premium you paid, say it was 100 * 75, so 7500 will be your loss (+ Brokerage and other charges).

Yes. When your Option position expires ITM, extra STT of 0.125% is charged on the Intrinsic Value, this is only for options which are left to expire, if you square-off your position there is no additional STT.

To give you an example, take the 11300 CE which expired ITM with Intrinsic Value of 200, additional STT for this Option if you leave it to expire will be 18.75 (200 * 0.125 / 100 * 75) (75 is Nifty’s Lot Size).

You can learn more about this here.

There aren’t any other tax traps, you can calculate Brokerage and all other charges here.

Also you can view full list of charges here.

I’d also like to suggest you to read through Varsity, there is Options trading module which will teach you everything that you want to know about Options.

1 Like
3

Thank you for the detail description
Just one more point
Who would pay me, exchange or the other buyer from the same strike price

4

No, not the exchange. It will be the counter party.

If you are the Buyer, there will also be a Seller who has sold this contract to you, that person will be paying it to you.

1 Like
5

But i’hv seen many times that a lot of into-the-money strike price has no or lesser buyer
What would happend if there is no buyer on that strike price

6

These contracts will be settled by exchange, so it doesn’t matter if there are no buyers or sellers.

Once exchange settles it, any profit or loss you will be making will be credited to / debited from your account.

7

So you’re saying even if there is no buyer or seller on that strike price
I’ll get my full amount, no matter what

8

If you have bought that means there must be a seller.

Kidhar dekha bhai?
Aisa kaise ho sakta hai?

1 Like
9

Right.

10

Bro please help men yaar im new to stock market ans had huge loss, i have few doubts and dont know whom to ask.

11

Hi Ajas, you can post your queries on the forum, community members will help you with your doubts.

1 Like
12

Today my profit was 30000 rupees ans after this I bought banknifty shares today, Rs.26 X 2000 shares and at the end of the day price value dropped to 0.05 and i was unable to sell those shares ans those shares expired, now its showing my loss is 22000 in portfolio and i my remaining funds are no where to be found. My opening balance was 1.04lakh rupees. Now its 4k only. Im unable to understans where the rest od money went

13

If your query is account related, would request you to raise a ticket here. Team will have this checked.

If you have realised this profit from intraday trading then this will be added to your balance on T+1 day in case if F&O and T+2 days in case of Equity.

If this Option position you took position in expired OTM, then this will expire worthless and you will lose all the premium paid.

For better understanding about Options, would suggest you to read this module on Varsity: