Option sell position not squared off on expiry

F&O
1

I missed to close my Bank Nifty option sell position on today’s expiry. Please someone tell me what will happen now?

2

Hy @Dishant_Rai

All out of the money(OTM) index options expire worthless.

All index ITM Options contracts are cash-settled.

3

Hi there.

Index Option is cash-settled. You get nothing if the position is expired OTM (since you have received the full premium when you shorted). If expires ITM, you pay the premium.

Charges? No brokerage charged if expires OTM. If your position expires ITM, the brokerage will be applicable. And there’s no STT since it’s only applicable on sell side which you have paid.

For more info, refer to the thread here: What happens if I don't square off my positions in options? - #2 by ShubhS9

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4

Did you phrase this wrong?
If your sold option expires OTM, you get to keep all the premium you received, since your sold option expires worthless and there’s nothing to settle/setoff against the premium you received.

1 Like
5

Well, you can say different explanations with the same understanding.

People who are new to Options are unaware/forget* that they already received the full premium when they shorted before and then on expiry, the exchange settled the trade at 0 (for OTM), which is why I framed this way:

You get nothing if expired OTM (since you have received the full premium when you shorted)

*tends to confuse with SPAN+Exposure margins blocked