Check section 4.6 in this below link on Varsity Zerodha . It’s explained in a more detailed way then we can explain here. Go through it and you can post if you have any doubt.
I also would suggest you to go through the options module on Zerodha varsity to get a better understanding.
all options in India are now European in nature , which means the trader can exercise squreoff his option position based on the spot price on the expiry day ONLY .
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my query is :
i can trade entry position exit squreoff excercise Options call put ; anyday anytime . On or Before expiry day .
As far as i know , In India CALL & PUT options are CE ( call option European style , allowed to exercise during option expiry day only , similarly PE - Put option European ) CA & PA Call option - American style , PA- Put option American style and allowed exercise at any point during the expiry cycle. At presently any of the Derivative products are not traded on this format
Squreoff option is diffrent and " Excercising option " is different , and you can trade , so its better to refer Zerodha Varsity Option Module before doing any trade on Options .
There is a difference between squaring off your option position and excercising your options right.
And to correct you, you cannot square of at the spot price. You square off at whatever the premium value the contract is trading at the moment.
You can trade European options based on its premium value just as any other stock. But , to excercise European options you need to wait till the expiry day. Whereas for American options you can “excercise” even before it’s expiry date.
That is why I suggest you to go through the Zerodha varsity options module to understand from the basics. Jumping straight into the middle of a topic is difficult for the learner as well as someone trying to explain it.