Query about shorting options

Hey guyz, new to f&o so please forgive me if my question sounds stupid.

Here it goes: Yesterday the nifty 50 call option of strike price 10,000 (todays expiry) was trading around one rupee and it opened today around 0.2. So, if someone had yesterday shorted 1,00,000 rupees worth of this option at price of one rupee and exited at 0.2 today, would their profit actually be 80,000 (80%)? I am sure I am missing something here. How can it be this easy?

Herre this is the monthly option , we dont have weekely option data in margin calculator , whatever so according to you 1 rupee value if we need to short we need 6.2 crores , you can receive 1 lakhs as premium , if its ended .2 on next day your profit is 80 k thats correct , but we need 6.2 crores if you have go aheaed

Thanks for the quick response. And what will the profit be if I had bought a call option at 1 rupee and exited at 2 rupees? Would my money actually get doubled?

Yesterday I bought call option of 1rs which 9000.16apr at the end of the day …it went to 6 rs…profit went to 375…i didnt booked profit…i eventually came to 0.2and booked tiny loss…so lesson…book profit when u see premium coming down…otherwise u will end up in loss…Also I bought yesterday 9050 16apr at 9rs it went to 13…didnt booked it came to 0.25…booked small loss again of 700 around…So greed always bleeds…thats wt i learnt this week from options …just felt to share it here.

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Thanks for your input. So, when it went to 1 rupee, you were able to buy 1 lot with 75 rupees, correct? That would have given some incredible returns in one day. Is every expiry like this or is this a rare occurrence?

Premiums required to short nifty options varies between rs 38000 to around 55000 per lot depending on strike price in mis. With a capital of rs 1,00,000, you would be able to short 2 lots of nifty ( lot size 75 so 2x75 =150 ). So, your position would be -150 quantity of nifty X strike price at 1. This is a net credit transaction so you would receive rs 150 premium. If you then square of the position at 0.2, you will retain rs 120 of your premium. Thus, your profit will be rs 120.
Charges including brokerage and govt charges will be around rs 47. So your net profit will be rs (120-47) =rs73.

And what if I had bought call option whose trading price had doubled, would my entire capital also get doubled when I exit? I would not need margin for buying, correct?

Thanks for the quick response. And what will the profit be if I had bought a call option at 1 rupee and exited at 2 rupees? Would my money actually get doubled?

Zerodha does not provide leverage for option buying. Take a scenario where option is trading at 1 and I sell it when it reaches 3. Quanity =75. So, It will cost me 1x75 to buy this option (whether intraday or delivery. My profit will be (3-1) x 75 =rs 150. So, to answer your question, by buying at 1 and selling at 2, you will double your money.

Yes…no need margin to buy…u can buy with small money…ur profits can go unlimited…my cousin bought a call option in september with 5rs premiums 2 lots…the next day Corporate tax cut has given…He profited about 23000 within one day…At the same time… Options is the easiest way to blow up accounts… Premium will go skyhigh in eyeblink at the same time downward to zero in eyeblink…be careful especially on expiry day …Options looks very juicy but thats pretty dangerous too…Good luck

Yes it doubles

Thanks for the reply. Now I get it.

Thanks for clearing up this. It indeed looks juicy. :money_mouth_face:

Hi Guys,

I have a similar question.

I expect the Premium of Rs. 10 XYZ 100 CE to go down next day. So is it possible for me to STBT (like stocks)?