I am new to options trading. Have a few queries on call and put writing. Suppose SBIN is currently trading @270 and i sell 285 CE or 260 PE and the expiry is between these levels. Do i need to cover my short options before expiry even if they are OTM. Waiting for reply…Thanks in advance
If you write both SBIN 285CE and SBIN 260PE and if SBIN spot closes between 260 and 285 at expiry, then both your options are OTM and will expire at 0. You get to keep the entire premium you received while shorting both these options. You don’t require to cover these.
You are wrong. Both will be OTM and expire worth less and no need to cover.
@haribabu, thanks for pointing out the mistake. I dont why i got confused. I corrected my answer.
Thanks for the reply.