If call writer need to buy his position back which we known as "short covering" what about put writing do they need to Square off their position?

General
1

If call writer need to buy his position back which we known as “short covering” what about put writing do they need to Square off their position?

2

I believe short covering is related to futures not options.

3

@Nigam_Patel a call writer or put writer need not mandatorily square off their positions. If options expire otm worthless then writers will simply retain their collected premiums. Also their margin blocked money will be released.

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4

then why they say (on tv) 3500000 open interest on 10200 call strike the so market will not go beyond it if it goes then 35 lak share will be at risk and then they will buy their position back and it will make further push to market as they cover their shorts

5

Could you Plz elaborate your ?

6

Mostly higher strike otm calls have huge oi build up. It usually means there is so much resistance at that strike.

Short covering means there is negative change in OI but positive change in price. I.e. big players exited their short positions (mostly indicated by future contracts)

7

SIMPLY Short covering & Long Unwinding is a general term use for FUTURE Contract.
But we can say in OPTION also for any particular STRIKE.

PRICE RISE ---- OI FALL than — SHORT COVERING.
PRICE FALL ---- OI RISE than — SHORT BUILDUP
PRICE RISE — OI RISE than — LONG BUILD UP
PRICE FALL — OI FALL than — LONG UNWINDING

Above term for both CE & PE & also for FUT.

Hope clear :slight_smile:

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Nigam i am.not sure about open interest. But any writer put or call if they want to exit their position and does not want to wait until expiry then they have to square off by buying equivalent qty put or call option. This is simply taking opposite position and hence they exit.