Shorting/Writing In the Money index options

[ShubhS9]

Already answered first two parts of your question here.

What is Hedge position?

You should chose which Option to trade based on your analysis and strategy. If you had Shorted that Option you would’ve gained 1600 - 710 = 890 * 75, if you would have Bought you would’ve lost 890 * 75.

Now coming to STT:

STT is charged only on Sell side at 0.05%. When you Short an Option STT charge is already accounted for, so irrespective of where the Option expires ITM or OTM there won’t be extra STT levied.

For Long Option positions left to expire, there is no STT if Option expires OTM as it expires worthless. For ITM Options, STT is charged at 0.125% of their Intrinsic Value.