Price Point at which options are excercised at expiry

General
1

Hello Guys,

I was having this query on options excercising.

If i sell the option contract of SBI at 300 strike and premium of 5 and spot of 290

For instance let us assume that on the expiry day the SBI closing is at 303.

In this case even if the contract is In The Money. It has not reached the break even of 300+5.

So the option buyer wont make profit anyhow. In such case will the option be excercised ?

Second query : I as a option writer will make any loss ?.
If yes how much should be my lose ?

Thanks
Vikas

2

You will be in profit of 2 rs (excluding tax) and option buyer will be in loss of 2 rs ( excluding tax).
But here buyer will be in much more loss if he didn’t cover his position till expiry because of stt.
.
If buyer don’t won’t to exercise this option so he have to fill the form and submit it before 5 pm on expiry day otherwise it will cash settled and his loss will increase.

For seller no need to worry will be in profit after tax also…