Options trading clarification

Can anyone please confirm I have bought 9500CE @Premium 39rs
If nifty doesn’t reach strike price on expiry day do I need to pay any extra amount to broker,what is this physical settlement means is it applicable for option buyers also?

Nothing would happen… No charges . Except brokerage.
Option buyer risk only limited to premium paid.

Thank you for your response sir,what does physical settlement means when will it come into picture

NO Physical Settlement in Index ( Nifty/BankNifty).

It’s only applicable to stocks derivatives. Read here


There are 2 ways you earn/loose money in the option market:
(i) Through Premium - Say you bought 9500CE @ Rs 39 when Spot price was around 9200, which makes 9500CE an OTM call option. Now if the spot price goes to 9400 then of course the premium will increase (though it may also decrease as the Time Greek (Theta) will work in opposite direction for you as you are the buyer). Now say the expiry is not that close and the premium has come to around Rs 50, You may close your open position by selling the contract and earn the difference between the premium price which is 50-39=11. In this way you do not opt for settlement, instead you close your open position by selling the contract to someone else.

(ii) Through settlement - Say the Spot price goes to 9700, which mean that your OTM 9500CE now becomes ITM, and now if you hold till the time of expiry, you are exercising the Right that you bought by paying the premium of Rs 39 to buy Nifty at 9500 when the spot price is at 9700. Although if it is under 9500, then of course it does not makes sense to buy it for 9500, and you won’t exercise the right.

Now coming to your question if the strike price does not reach 9500 your premium of Rs 39 will decay and will eventually become zero at the time of expiry, now here you’ll be loosing only the premium which is already paid and no extra charges are to paid except the brokerage.

1 Like