Settlement of index options on Expiry

You can leave it to expire, exchange will settle it at Intrinsic Value and any profit or loss you are making will be credited to / debited from your account.


Will liquidity come in the picture? Or it is intrinsic value which will be traded?

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Upon expiry, option won’t be trade. It’ll be settled at the intrinsic value.

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STT of 0.125%

Does it really make a huge difference ?

Or should i square off the position before 3.30 pm and pay normal regular STT and the brokerage ?
I hope there is no other differences ?
(By the way: what would be the STT if i square off exit before 3.30 pm)

What does your experience and expertise advise us on this ?

What would happen if i request for excercise / donot excercise option etc ?

Or is there any other way around to maximise the profit?


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Humble request for the kind reply . I indeed appreciate …

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To explain with a hypothetical example -

ITM option is exercised at expiry ITM option is squared off before expiry
Trade Details - Bought 100 Lots of Nifty 16,000 CE @ Rs.15 Trade Details - Bought 100 Lots of Nifty 16,000 CE @ Rs.15
Nifty lot size = 75 Nifty lot size = 75
Nifty settlement value at expiry – 16,100 Market Price at which Nifty 16,000 CE Option was squared-off – Rs.100
Instrinic Value of contract – (Settlement Price - Strike Price) * Lot Size * Number of Lots = ( 16100 - 16000 ) * 75 * 100 = Rs.7,50,000 Value of contract – ( Premium * Lot Size * Number of Lots ) = ( 100 * 75 * 100 ) = Rs.7,50,000
STT at 0.125% on instrinic value – 7,50,000 * 0.125% - Rs. 937.5 STT at 0.05% on contract value – 7,50,000 * 0.05% - Rs. 375

With reference to this thread and this thread

Simply put, the STT charges for exercised options are 2.5 times compared to STT charges for options that have been squared off.


Big difference .
So , isn’t is the best to squareoff/exit the ITM bought options before 3.30 pm on expiry ?

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Apologies, I had shared the wrong STT charges. In the above example, when one is trading 100 lots, the STT charges for exercised options is 937.5 and the STT charges for squared-off options is Rs. 375.


So . Not much difference with 100 lots too .
So . I think it doesnot matter whether i exit before 3.30 pm or let it expire after 3.30 pm . On the expiry day?

Am i right?

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As u said that if i don’t let the ITM buy option ; squareoff/exit before 3.30 pm ; the only cons is : i have to bear the STT 2.5 times the normal STT .

which i think hardly makes any difference !
What you think on this ?

BUT , let say suppose e.g. : i have taken a hedge position , wherein i have got margin leverage exposure benefit due to the hedgeing .

In this scenario , if i exit/squareoff the above long ITM position before 3.30 pm or at 3.29pm ; to save myself from not paying the 2.5 times of the normal STT ;;; will it result in any peak margin penaty or eod penalty ; because although it is the expiryday , i break the hedge at 3.29 pm whereby the margin require would increase !!!


I have one lot of NIFTY 17000 CE which I got at 290. On expiry, what will be the amount returned to my account if NIFTY is at 17250. Either 12500 or 27000 (excluding the taxes)?

ITM options are settled at intrinsic value. If Nifty closes at 17250 on expiry day, 17000 CE will expire with intrinsic value of Rs. 250 and amount equivalent to Rs. 250 * Lot Size will be credited to your account.

To learn more about options trading, would suggest you check out the options trading module on Varsity:


Thanks that means I will have to suffer a loss of Rs. 40x50=2000?

Right. The difference between your buy price and settlement price will be your P&L. In the above scenario, a loss of Rs. 2000.

Thanks :+1::blush:

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So here Average Closing has no role in deciding final settlement price and LTP is the intrinsic value :thinking:

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On expiry, the settlement of options will happen according to the final closing price of the underlying, take for example Nifty 50.

If you’re holding Nifty 18500 CE and on expiry day the final closing price of Nifty is 18525, in this case, the option will expire with intrinsic value of Rs. 25. This is the price at which option will be settled.

Ok got it… But LTP and intrinsic has any price difference or it’s already calculated before closing. that’s what i want to know … like yesterday 18300 ce LTP and intrinsic almost identical 43.8 and 43.9 …

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LTP is driven by supply and demand, so it’ll vary a bit from intrinsic value.

Thanks for the info :pray: