How to carry forward position of one expiry to other month's expiry


#1

I am holding November lot of a share and if I won’t get my price in the November expiry, then I woul like to roll over it to December expiry.
Please advise the following:

  1. How to initiate rollover?
  2. What if I won’t square off my November expiry? Will it be automatically squared off or automatically rolled to December future?
  3. Are there any charges?

#2
  1. Square off November
  2. Initiate December

Its two step

If you dont close November, it is auto expired by exchange and some charges apply

This is only for Futures, you cannot rollover Options


#3

you cannot rollover Options…means…


#4

You can take rollover position in options but it will not be as useful as futures rollover.

You will pay around 1% as premium for rollover of future position.

But the price of an option itself is a premium. If Nov month option position expires worthless, you can rollover by buying December month options. But we need to pay the full premium again. We will not receive any money from the expired OTM option.

This is not the case for futures, blocked margin will be released. We need to pay around 1% additional premium to buy next month future during expiry day


#5

when your bet goes negative in case of option buying then it will be negative for future also…actually u will have lesser losses in case of option compare to future in case of negative outcome…
in future the margin blocked will reduce accordingly as like cost of option…
pls correct me…


#6

This is not always the case. Options can create or destroy wealth.

For example, let’s say you are buying the option of a stock trading around 100. Ashok Leyland looks like a good example.

The price of Ashok Leyland 110 ce is around 2.65 rupees. Its lot size is 4000. Total cost is 10600 rupees.

Price of Ashok Leyland future is 106.7 rupees, 60 paise above the stock price pf 106.1

If i bought option, during expiry day Ashok Leyland stock is trading at 110 rupees, then my loss is 10600 rupees. The loss in option is fixed amount even if stock is trading below 100 rupees.

If i bought the future and Ashok Leyland is trading at 110 rupees during expiry day, my profit is around 12000 rupees per lot. But buying option results in loss if the stock is trading at the same price

The real trouble in future is, imagine the stock is trading below hundred during expiry day, i will be in very huge loss. There is no fixed maximum loss like options.

An optimal solution is following an option strategy with a view of the stock. We should ensure the risk reward ratio of atleast 1:2 and maximum loss in the strategy is limited. Because a fall like yes bank, dhfl, infi beam and many more stocks will erode the capital if risk is unlimited

I think Zerodha is providing margin benefits for options strategies.