Why is the out of the money 9000 PE trading at 6.95 ? The screen shot was taken seconds before expiry.
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Today Nifty50 Index is closed at 8992.80 ie; , So 9000 PE is ITM
Further, the Settlement price of an Option on expiry day is based on the closing price of its underlying and the price will close to its intrinsic value of that option.
@Muniz.Reza How could one possibly know at 3.29.50 that the closing price after 3.30 will be less than the last traded price? Nifty last traded @ 9016.60 and the closing price was 8992.8 .
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@zutshi Nifty50 index close price is calculated based on the weighted average closing price of 50 constituent stocks on the last 30 mins of the trading session (3:00 PM to 3:30 PM).
Thanks @Muniz.Reza. So the closing price will be inclined towards direction of the last 30 min move . If there is a sharp downfall in the last 30 mins the price will be less than the last traded price.
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@zutshi Yes, The traded price & qty during the last half an hour will reflect in the calculation of closing price.
Moreover, I will just give the background of it,…
The closing of Indices & stocks are widely tracked by/for investment Analysis, Mutual Funds, Analysts, Banks, regulators, FII, etc. This method of calculation narrows the attempt of a trader to manipulate the closing price by high/low closing at the end of the trading hours, especially when the stock is illiquid.
The exchange publishes closing prices after 3.30 PM, after the end of the trading session.
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