Nifty 22200 PE 6th June 2024 Options Expiry

F&O
1

Hello Everyone,

I have sold Nifty 22200 PE 6th June 2024 expiry, at a price of Rs. 173/- (1 lot). But, because of the huge sell-off I’m currently suffering from huge losses. Accordingly, it is requested to kindly outline the benefits / demerits of letting the option expire un-exercised, since it is ITM, now.

Note: I do realise that it would be cash settled as well on the intrisic value i.e. 22200 - Spot Price (on the day of expiry) * lot * lot size (i.e. 25 in case of Nifty Contracts). As well, since I have sold the options thus, no STT would be applicable on expiry.

Kindly correct me if my understanding of the above is wrong.

Please also provide insight to the settlement process because I’m unable to understand the final amount that I would have to pay and what would happen to the premium that I have received i.e. 173*25 = 4325/-.

Thanks & Regards.

2

Hi @ranveer

Your understanding is correct.

When the option is settled, You will have to pay the full premium just like how buyers in general do to buy back the option to close it. (Exchange will do it on your behalf)

Let’s assume that Nifty expires at 21800. 22200 PE will expire at 400 and your account will be debited with 10000 rs (400*25) and your net loss for this trade will 400-173 (premium already received)= 227 points *25 = 5675 Rs. + other charges

3

Thank you so much for this quick & elaborate explanation, greatly appreciate it.

Anyhow, just one quick confirmation… So, my net loss i.e. money that I would have to pay is Rs. 5675 + Other charges?, if the Nifty expires at 21800.

4

not criticism but why did you not sell the opposite side CE ? could have made a lot of money.

5

The amount that you would have to pay would be the premium according to Nifty’s expiry. 10000 Rs. in case nifty expires at 21800. Overall loss would be 5675 as you have already received 4325/- previously when you sold the option initially

6

Very true, but was not at all anticipating such a massive sell-off, that’s why had sold OTM PE around 1000 pts. away.

7

Thank you so much for confirming.

1 Like
8

yeah yeah, not blaming, just saying but hey atleast you only have this much loss, people have suffered worse today.

9

I hav a doubt …for eg: current nifty price is 23,000 and i hav 21,000 ce buy option at 1,700 I hav observed many times tht there will be no change in price since morning in 21000 ce but I hav buyed it and if market closes at 24,000 but still the price will be same 1,700 so why this is happening and if I don’t square off myself at what price will it be settled kindly reply