Index Options selling

F&O
1

How are Index Options like Nifty settled in India from sellers perspective?
If I sell a 17400 NIFTY PE at Rs.40 and collect 2000 premium and it expires at strike price of 17300 then as a seller, how much do I have pay as my option expired in the money?
And what if it expires out of the money? (In the above example instead of 17300 it expires at stirke price of 17500)

2

Hy @vikj

When a contract expires OTM the contract expires worthless. Since you would have shorted the contract Premium received shall be your profit.

If its ITM contract the options(Index Options) are cash settled and depending on your Profit/Loss money will be credited to / debited from your account.

3

Thank you @KarthikAcharya.
But then Profit and loss calculated only using premium values? (difference between premium received while first sold and premium when contract was bought back) and not the full value of the contract?

4

@vikj it will be the difference between the settlement price and the selling price.

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