Please explain my loss in the case of the Netted-off option position

F&O
1

Please explain my loss in the case of the Netted-off option position

Example:
Short REC 235 CE at premium 3.2 and 1 lot (1 lot = 8000)
Buy REC 240 CE at a premium of 6.5 and 1 lot (8000)

Suppose REC closes at 245 Rs on expiry and I do not close the above 2 positions. As these are ITM positions, it will be netted-off and I won’t have to take the physical settlement. How much will be the loss in this case? Please include the brokerage and STT charges.

@ShubhS9

2

Short REC 235 CE at premium 3.2 and 1 lot (1 lot = 8000)
Buy REC 240 CE at a premium of 6.5 and 1 lot (8000)

First of all, this is OTM( out of the money) so the premium will be zero on the expiry.

So, premium received= 25600
Premium paid = 52000
Loss = 26400

As the contract expired worthless so there won’t be any charges. Charges will be applicable when the positions were created.

3

How it is OTM?? REC Expiry price is 245

4

For all netted-off positions (spread contracts, iron condor, etc.), the brokerage will be charged at 0.1% of the physically settled value.

What is Zerodha’s policy on the physical settlement of equity derivatives on expiry?

5

As u have net off positions, you would not be obliged to take/give any physical delivery.

Loss on 235 CE sell will be 6.8 rs and loss on 240 CE will be 1.5 rs.

So net loss will be 8.3 rs + charges

You can check our support article on charges:

6

My bad, it was a CE position, I read PE