What happens if I let the options expire on the day of expiry.
Suppose I have HDFCBANK 1900 CE which I bought at 20INR. I do not sell it off till expiry and at expiry HDFCBANK share price is 1940. My understanding is that I will be getting a profit of 20*Quantity. Is this assumption correct, am I missing something here. Please let me know
If HDFC Bank share is at 1940 at expiry and you had bought the 1900CE for Rs.20 then your profit will be 20 minus taxes & charges.This is because of the fact that although your 1900CE has expired 40 points In-the-Money, you had already paid Rs.20 to purchase the CE initially. So Net Profit becomes 40 - 20 - (Taxes & charges).