Why nifty 50 index value changes right after 3.30 p.m
Till now ,i never noticed it.
But now only i started option trading .
I noticed that there is almost around 20 points change.
Can anyone tell me why
Another topic regarding
How can i exercise my option contract
Does it takes place automatically or i have to do manually (on expiry date).
Or it is cash settled
I read about DNE (Do not exercise ) facility on zerodha
Reintroduced at April 28th 2022 onwards
Example:
nifty 50 16600 CE 9 th june contract
Premium paid Rs. 210.15 (210.15×50 =10507.5)
As of today nifty 50 spot value 16628
Intrinsic value=28
Lot size =1
My question is
How much i earn
Scenario 1
Intrinsic value 28 × 1 lot (50 quantity) =Rs 1400
Final profit Rs 1400
And premium at expiry is zero
So ,Net = 10508- 1400
= Rs. 9108
(loss of Rs 892)
Scenario 2
Rs 1400 Net profit
(profit of Rs 1400)
Premium amount is fully returned to account
Scenario 3
Intrinsic value 28
P&L = 28(intrinsic value) - 210.15 (premium paid)
= -182.15
Net = -182.15 × 1 lot size (50 quantity)
= -9107.5
Final P&L =Rs. - 9107.5
Note: Does premium value remains not zero or zero after expiry
The final closing price of the day is weighted average price of the last 30 minutes of trading. This can vary from the LTP (Last Traded Price) you see at 3:30 PM.
Index Futures and Options are cash settled. The physical delivery obligation is applicable only for Stock F&O. You can learn more on physical settlement here.
Calculating P&L is simple. If your option expire OTM, it’ll expire worthless, and if you’ve bought the option, you will lose the entire premium paid. While if you’re a option seller, you will get to keep the premium recieved.
If the option expire ITM, it’ll be settled at the intrinsic value. The difference between your buying price and settlement price will be the P&L.
For example: You bought 16600 CE at Rs. 200, on expiry day Nifty closes at 16700. The intrinsic value will be Rs. 100 (Spot Price - Strike Price).
Since the option was bought at 200 and settlement price is 100, you will be in loss of Rs. 100 x Lot Size (plus charges).
Also, exchange charges STT at 0.125% on ITM Long option positions that are left to expire. This is charged on the intrinsic value.
For detailed explanation on Options, you recommend you read this module on Varsity: