Intraday option selling

General
1

I am new to trading , and i want to trade in options, i have some doubts about options writing

my acccount size is say Rs.10000

see for example nifty call 8350 is trading at Rs36 and if i sell it as intraday order ,then

how much premium is received to me ,?

will my premium credited into my account immediately after placing intraday order?

how the profit is calculated for intraday option selling please illustrate with an example ?

2

first of all you need approx. 15000 rs to hold overnight and approx. 7500 to trade intraday in MIS product which will get square off at 3: 15 pm and second if you write 8350 call at 36 rs , you will get 25*36=900 bucks and yes premium will be credited into your account immediately and your profit or loss will depend upon rising or falling of premium , if premium rise by 4 bucks , your loss will be 100 , if fallen by 4 bucks profit will be 100 , as you are buying intraday using MIS product , your position will get automatically square off at 3:15 p.m. , whether you are in loss or profit with prequisite that you himself does not have close your position .

3

If you use Cover Orders, you can sell 2 lots of Nifty with account balance around 10,456

Currently the premium is around 14.6 rupees, So 50 x 14.6, you will get 730 rupees to your account as credit (and 10,456 will be blocked from your account since you are writing/selling options as margin block)

Yes the premium will be immediately credited to your account limits, but cannot be withdrawn until next day. But you should understand the fact that 730 rupees is credited and 10,456 is debited, so in net, your account will be debited or blocked for 9726 rupees immediately. So you cannot do any further trading with the premium recieved until you close your position in intraday or autosquare of cover order at 3:20 pm. (hopefully with profits)

If by evening premium price decreases to 10 rupees, then you buy back or square off your option. Since you are buying the option at 10 rupees (and squareing off), the margin money will be released immediately (9726 will add to your account) and immediately it will debit 10 rupees x 50 = 500 rupees from your account for square off buy order at 10 rupees.

So your original blockage of 10456 is restored and 730 you received while writing 2 lots and 500 got debited while square off buy of 2 lots at 500.

Your new account balance will be 10456 + 730 - 500 = 10686

So in net, you are 230 rupees profit.

1 Like
4

I am not clear on the last part of the answer above. If I sell call say at 10:00 AM in the morning , can I not buy back at 11:00 AM if I am in profit ?. The answer in the above statement makes me believe I cannot buy the order back and the system will close it for me , if its a loss or profit

5

u have full freedom to buy back the option premium whenver u like .
intraday postion gets squareoff at 3;20 pm and the regular one lasts till end of the contract tenure .
call customer care for further queries

6

HI all ,

Can I withdraw the premium received by option selling?

EX:- I have collateral worth of 100000/- rs in my trading account, I have created a short position in nifty by selling an option,
now whatever the premium I have received by selling, can i withdraw to my bank account?

7

Yes, you can. But be aware that any shortfall will trigger a demand for more margin money, and failure to do so will automatically close down your short position.

Here is an example: Say you short (sell) ONE BANKNIFTY option at price of Rs. 300. As the lot size is 40, you receive a total of Rs. 12,000. However, to short an option, you need to have margin money in your account. For BANKNIFTY options, it is usually 60-80K per lot.
Since you are having 1 lakh in your account, as soon as you place the order, the margin money, say 60K, is locked. You cannot withdraw this amount. Rest 40K is available to you for withdrawl or for more trading.
Now say your short sell order gets executed. So you will receive 12K in your account, which will increase your disposable money to 52K.
You are free to withdraw this 12K (or 52K in total), but beware that if the option position that you took goes against you, than the broker will raise a request for additional margin money which you will have to provide i.e. credit back the additional money.
If you fail to provide that, your short sell position will be closed automatically at a loss.

Hope this helps.