Hi Can you please clarify on the below query:-
- I sold Infy 1280 PE for Jan Expiry by collecting 10 Rs Premium.
- On Expiry Stock is trading at 1200.So On expiry value of the PE which I sold for Rs 10 will expire at the intrinsic value of Rs 80 ( 1280-1200).
- I am happy to receive the delivery of the stock at my contracted strike price of Rs 1280.
- In above situation what is my obligation at expiry if I let the Option expire as ITM.
My understanding is I will need to pay 600 ( Infy lot size) X 1280=768000 plus any brokerage plus STT on intrinsic value . Is this understanding correct ? What will happen to the intrinsic value of the PE I sold. Do I need to pay intrinsic value as well ?
Your early reply is highly appreciated.