If someone has bought a CE deep ITM in nifty and we see that due to deep ITM, the spread is huge between buyer and seller due to less liquidity.
Now, on expiry if we exit the CE by selling, we might lose money as the buyer might be at 100 rupee less.
So, we do not exit the deep ITM CE Buy.
How will the exchange settle it then? Who will pay me equivalent to the Intrinsic Value?
In the settlement process, can I still lose 100 ruppee as broker might want 100 ruppee from me after the settlement because of no liquidity and he paid to the exchange for cash settlement?
Please put more light here if this CASH SETTLEMENT can also become dangerous similar to PHYSICIAL DELIVERY of stock ITM options?