Need a Quick Confirmation on Crude Oil Option Expiry

Commodities
1

January Crude Oil Future expiry is on Jan 16. But the Options are shown to be expiring today (14 Jan)

My queries

  1. Are the Crude Oil options expiring today?
  2. If today they are expiring, does it mean that ITM/OTM/ATM will be decided based on the last price of Crude at 11.55 pm today? Or will ITM/OTM depend on Jan 16 Future expiry?

If my short options expire at OTM today before I exit, I will get the entire premium right and do not need to depend on Jan Future option expiry on 16th. Correct me if I am wrong.

Please help!

As suggested by BB789 in the comment section, tagging @Arockiya_Raja @siva Will be grateful if you can help me

2

ITM Options devolve into futures.

3

What is the expiry date of the options? I am confused with different date for option and future . In crude oil, there is no weekly options but still option and future expiry are different

4

During options expiry, ITM options gets converted to futures and then futures expire a few days later some with mandatory physical settlement(which zerodha tries to avoid, but if it can’t, you must buy/sell barrels of crude oil).

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5

Thanks a lot! So, if my options expire in OTM, I don’t need to worry.

6

I think so… if you need official confirmation, tag zerodha or create a support ticket on zerodha or call em.

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7

I don’t want to create a ticket for it. Btw, can we tag Zerodha representative in this posts ? What is the ID?

8

@siva @moderators @Arockiya_Raja

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9

Thanks so much for your help!

10

Yes, you don’t need to worry if it’s a short OTM position. Its value will be close to zero at expiry, and you’ll keep the premium. You can check the premium—it should be near zero and dropping quickly if today is the expiry

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11

Thanks for the confirmation. :slight_smile: I knew that about F&O but wanted to check if same rule applies for Oil.

12

The above discussion in this thread is correct🙂. I’m just writing it here for confirmation so it can help others as well.

The settlement price is usually calculated as the weighted average price of the January Futures contract during the last 30 minutes of today’s trading session.

If your short option is out of the money based on this closing settlement price, it simply expires worthless, meaning its value becomes zero. You keep the entire premium you collected, and your obligation ends tonight itself you don’t need to worry about the January 16 Futures expiry or any risk of the position being devolved into a futures contract.

4 Likes
13

Thanks so much!

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