Can someone pls tell me about stt trap and things to be careful about when trading in options including risks involved with option expiry and exercising options>
This varsity article explains about stt trap
No need to worry about stt trap now
STT for 1 lot of unexercised in the money options are approximately 30 rupees per lot of banknifty and approximately 15 rupees per lot of nifty. It depends upon strike price and intrinsic value.
Do most option traders square off their positions before expiry or does it make sense in some cases to let it expire?
Personally, I square off my open positions.
If your option is deep in the money, it will be trading at a discount. You can keep such options because selling them at the discount price may be equal to stt charge or a little lower. There will not be much loss due to STT.