Hi , Sorry for the very basic question. Does option sellers need to close their position compulsory on expiry day if the option is far out of the money or expiring zero ? How does margin unblocking happens if they are not closed the position far out the money?
No.
For OTM, the released margin will be available for next day trading.
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It is advisable to close your short option positions when approx 75-80% of the premium has been decayed. Don’t wait for the options to become 0.
The reason behind this being any last minute move against your position can make the OTM options go from 4-5₹ to 50-80₹ also, if the momentum is fast which is quite normal after 1-1:30 p.m since market movers and big players mostly place their bet after that time…