does nifty premium goes beyond zero?
plz reply the below queries
Example: assume today is Tuesday 8th december and i have entered a MIS position in nifty say nifty 13300 PE at 20 (which means 7520=1500 ), and the market went bullish and my call went in opposite direction.
and the premium reduced to 8 now(758=600, which means im currently having a loss of 900 rupees)… … can plz someone tell me does it goes beyond zero (say like -25) if im unable to exit the position?
what would be the penalty if i cant square off MIS position. and if it is carried forward and next day it goes in lower circuit. ( say 0.04) what would be the charges applicable to me.
The Option premium does not go beyond zero, the max loss which you can make as an Option buyer is limited to the premium paid.
To learn more about Options, would suggest you read this module on Varsity:
In MIS, if you do not square-off your position before cut-off time of 3:25 PM, RMS will auto square-off your position, for this there will be charges Rs. 50 + GST.
In case RMS isn’t able to square-off your position due to volatility or lack of liquidity this will be carried forward under NRML. As you are Option buyer and have paid full premium upfront there is no chance of margin shortfall and possible margin shortfall penalties.
And as mentioned above, as Option buyer your loss is limited to premium paid, so even if you aren’t able to square-off your position due to lack of liquidity, your losses are limited.