Need clarification on what happens when call expires ITM with a bit detailed help.
Share Code: BOSCHLTD
I sold 17500CE at 650 and 18500CE at 600. Currently BOSCH is trading at 17600, hence lets say both the calls will be ITM at expiry. However, 17500CE is mostly illiquid and trading at 650, while 18500CE is trading at 300. At expiry both of them will be physically settled. In case I choose to square off today, I will be losing significant chunk of profit that I can bag otherwise.
How to tackle this scenario where I want to maximise my profits from the short CE? There are different options as per my understanding:
Long 2 futures of BOSCH for Oct month so that actual physical delivery would not be needed as it would be net off.
Buy 100 shares of BOSCH at current price (1 lot Fut is 50 shares) and let it be physically settled.
Which would be a better option or if there are any other ways to tackle this? If someone can explain a bit in detail for two scenarios:
If underlying closes at 17600 on expiry day, the 17500 CE will expire ITM and will result in you giving delivery of underlying shares as you’re short, while 18500 CE will will be OTM and will expire worthless, there will be no physical settlement for this option.
It’s down to your own preference actually. Whether you want to go for physical settlement or not.
At 17700, 17500 CE will expire ITM and will be physically settled, while 18500 CE will expire OTM.
At 17000, both. 17500 CE and 18500 CE will expire OTM.