How to exercise an option on expiry.?

 Call option excise depending on whether you are a buyer or a seller of a contract.

  • For a buyer of a call option:  There are two ways to settle – squaring off and physical settlement. If you decide to square off your position before the expiry of the contract, you will have to sell the same number of call options that you have purchased, of the same underlying stock and maturity date and strike price.
    <p>For example, if you have purchased two XYZ stock’s call options with a lot size 500 and a strike price of Rs 100, which expire at the end of March, you will have to sell the above two options of XYZ Ltd., in order to square off your position. When you square off your position by selling your options in the market, as the seller of an option, you will earn a premium. The difference between the premium at which you bought the options and the premium at which you sold them will be your profit or loss.</p>
    <p>Some also choose to buy a put option of the same underlying asset and expiry date to nullify their call options. The downside to this option is that you have to pay a premium to the put option writer. Selling your call option is a better option as you will at least be paid a premium by the buyer.</p>
    <li><strong>For the seller of a call option:&nbsp;</strong>If you have sold call options and want to square off your position, you will have to buy back the same number of call options that you have written. These must be identical in terms of the underlying scrip and expiry date and strike price to the ones that you have sold.</li>