Selling Option call on Expiry day

F&O
1

Hi Guys,

Are there any implication if I sell option call on expiry day?

Let’s assume I sell 30800 ce 20th June exp Bank Nifty with current strike price of 4. I sell 2000 lot size at strike price of 4. When the end of the day is near if the option is out of money i.e if the banknifty is trading below 30800 then I suppose the strike price will be between 0-1 before the end of the day, so would I be able to buy the 2000 lot size at pricing trading between 0 to 1 and book almost 100% profit?? Are there any implication to it.

Thanks in advance.

2

No other implication, just close it before expiry, otherwise there may be charges if position is left open

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3

As long Banknifty closes below 30800 no need to worry, the option will be considered out of the money.
Exchange will not exercise the contract & your entitled to book 100% profite. In case if you want to buy back the position then please refer to seller price / place your order at limit price based on your convenience.

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4

Thanks for your reply. I am trying to sell 30800 ce 20th Jun at 6.25 in 2000 lot, so the margin required should be 2000*6.25 right? But Zerodha is throwing an error saying insufficient funds and it says I need margin more than 3 lakhs for it, can you please help me what this is about?

6

The amount you mentioned is for buying the options, but you are selling them.

Margin for selling a option is quite high, around 30000 for one lot intraday and around 90000 overnight

1 Like
7

Exchange mechanism of calculating margin on Options shorting is (strike price + premium * quantity * 12%). It works same for all three month contracts, except long dated options.

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8

Thank you all. Appreciate your help.

9

What if the option he is selling expires in the money or at the money?

10

Index F&O are cash-settled, if the option expires ITM, it will be settled by the exchange at the intrinsic value. The difference between the settlement price and the selling price will be the P&L, which will be credited to/debited from the account.

1 Like
11

If you close before expiry, then you’ll be able to avoid unnecessary situations. Just keep an eye on the news so you can make a decision based on what works the best for you.