I’m confused regarding options selling and my question is that today nifty is trading at 10800 level and on 7th march 2019 the nifty has weekly expiry now i know that nifty will remain above 10400 strike price If i sell 3000 stocks of 10400 put option @ 7 rupees LTP and the premium i will get is 21000. Now imagine if nifty starts to move downwards then the LTP will start to move up meaning i will start incurring losses but on 7th of march nifty remains above 10400 let us say 10500. What will happen then at time of expiry will i get full premium ie 21000 or something else ??? Please explain ?
You will get full amount, if you hold till expiry.
Assume that If you sell 3000 quantity of 10400 put option(expiry March 7th) at 7/- LTP, you will get 3000x7 = 21,000 into your trading account. Assume that on the expiry day NIFTY ends at 10500 it means that your 10400 put option will become out of the money PUT and becomes worthless. So you can keep 21000 with you but if it gets automatically cash settled you will have to incur high STT. So better you buy them back at 0.05 or 0.10 for safer side.
What concerns me the most in your question is that you are asking basic question in trading options. That means that you have entered this market without proper understanding of it. This way you are putting all your money at risk.