Option Assignment advanced questions

F&O
1

Premise
The Stock Price of reliance was 2300 Rs. I sold 2100 Feb PE. Stock price crashed and reached 1800. I wanted to gain back some of my losses, so I sold a 2000 Feb CE. Both positions are for 1 lot.
On expiry day suppose the stock market closed at 2050.

Scenario 1
I have one lot of reliance with me. . Do the stocks get assigned or not? Will the position get squared off? If they do will it be categorized as intraday trade? If not how will the trade be categorized as?

Scenario 2
What will happen if I don’t have any shares of reliance with me.

2

On expiry if the underlying closes at 2050, both your 2000 CE and 2100 PE will expire ITM.

As you’re holding contracts with different obligation Short CE (deliver underlying shares) and Short PE (receive underlying shares), your obligations will be netted-off against eachother.

You can check out this post, explaining physical settlement in detail.

3 Likes
3

What will the contract note show?