Option Selling Expiry

F&O
1

I had shorted 22500 PE On Wednesday

Today banknifty is at 22800. On Thursday expiry

But my 22500 PE hits lower circuit on expiry

So how’s would I exit my position

2

Your 22500 PE is Out of The Money, in this case you can let it expire.

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3

But don’t we have to buy the PE before expiry then only I will get the profit na…

If I wait till expiry then I didn’t square off my position

So without squaring off position , don’t u think I have to pay for the penalty here

4

There is no penalty for letting your Option expire.

See, you Shorted 22500 PE for say Rs. 100, and on expiry day underlying closes at 22800, your 22500 PE will have value of zero and will expire worthless and you will get to keep entire premium recieved when you shorted this option (ie. 100 * Lot Size) this is your profit.

Read this module on Varsity, everything has been explained in detail and you will get to know much more about Options.

5

Suppose I shorted a March Reliance Call option at 1920/share expecting Reliance to go down before expiry ie the 26th of March. Unfortunately, the contract expired Reliance at 2020/share last Thursday. With my funds “Being margin blocked for sale of RELIANCE”. On Friday ie 27th March and on Monday 30th March Reliance jumped to 2200/share. In this scenario what will happen? Lot size: 250

  1. Will I get delivery of RELIANCE shares at 2020/share even with a negative balance which is now 2200 (Effectively profit around 45000)?
  2. Will I have to pay Zerodha 2200-1920/share ie 280/share (Effectively loss around 140000)?
  3. Or Will it be auctioned at Trading Day +3 like Equity stocks?