Hi ! suppose stock A is trading at Rs 500 and I short stock Rs 550 call option. Assuming lot size of 100 nos and premium of Rs. 5 I get Rs 500 (100x5) On expiry of stock closes at Rs 540, will I have to pay anything, or I will gain Rs. 500.
You won’t have to pay anything as the call has closed out of the money. But to write the call you would need to maintain a margin which will be almost equivalent to buying a future.
The entire Rs.500 will become your profit if the stocks closes at 540 at expiry. You don’t have to pay anything.