If I hold 5 Lot’s of NIFTY 8350 call option contracts and not squired off the same on expiry.
At the time of closing on expiry nifty is trading on 8355.
How would be the settlement calculation as per above scenario? Is same applicable for stock options.
Firstly I guess you know that the closing price of Nifty is average price of the last 30 mins. Assuming that this price is 8355 and you had 8350 calls that you let expire. This is 5 point in the money, so when it expires you get Rs 5 per Nifty as settlement price.
So for 5 lots or 125 Nifty, it is 125 x 5 = Rs 625.
But the issue with letting in the money options expire is that STT is charged at 0.125% of the entire contract volume. Check this post.
Thanks Nithin, but have one more query here if nifty close below 8350 supposed on 8340 then I would loss all my invested money or I will get some thing as my position it’s getting out of the money now?
You will loose everything because it is 8350 calls, and it is of value only if market closes above 8350. Check out the options module on Varsity: http://zerodha.com/varsity/