Sir one more question, is it the same with stock options as well? or it’s different for stock options that expire OTM? do i have to give/take deliveries in such case or they also expire worthless and will disappear from the account next day?
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It is the same for stock options.
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you sure brother? i’m confused coz i’ve seen notification about compulsory physical delivery. I understand that OTM options will expire worthless incase of stocks and index both but still i wanted to confirm before i make a move which might put me in trouble 
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Hey OTM means they are worthless, so there is no physical delivery happening. Only ITM options have physical delivery.
Btw, I don’t think you should be shorting options without understanding basics. They are quite risky. Why don’t you give a shot at the F&O module on varsity.
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Hi…
Suppose i have short position of NIFTy 9800 CE and 9800 PE… i received premium say 113 on CE and 115 on PE… on expiry I’m not squae off… how much would i have to pay/ receive if expiry price of CE rs 60 and PE 175…please explain this with OTM and ITM…thanks
That is a wrong question. On expiry you can’t 60 and 175 for the same strike price calls and puts. One of them will always expire worthless. For example if market closes at 9900, 9800 CE will close at 100 (ITM) and 9800 PE will close at 0 (OTM).
Anyways, if options expire out of the money or worthless, there is no STT. If it expires in the money, it is 0.125% of intrinsic value (strike price - final settlement price of underlying). So if Nifty closes at 9900, for 9800 CE it is 0.125% of 75 * 100 (9900-9800 = 100)
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thanks…
ok, how much would be my net gain/loss . suppose i collected premium ( 113 + 115 ), if the market closes at 9900.
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If u collected 228 and market closes at 9900, you make 118 points profit on Short 9800 CE and 9800 PE. The trading costs aren’t going to be much (less than a point kinds).
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thanks for your response… so is this a good strategy to make profits ?..when the margin money get back ?
This is a good strategy if Nifty stays within 228 points from 9800. If it goes above 10100 or below 9600, you start losing money. There is no easy answer to your question. Suggest you to go through the entire futures and options module on Varsity before trading.
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thank you very much…
one more doubt… suppose i sold NIFTY CE and collected Rs. 100… on expiry, the price is at Rs.150 and not squaring off the position, my net gain would be Rs.50 right ?
No, since you have “sold” the contract for 100 and it’s price at expiry is 150, you will be in Rs.50 loss.
but i collected 100 and i need to pay net 50 ( 150-100 ) so still would thre be profit of 50 ?
It doesn’t work like that, when you sell for 100 you only make profit as long as price stays below 100. Above 100 you make loss.
I suggest you to learn Option trading basics before diving into Options trading, you can start at Varsity.
Without proper knowledge about options you can do serious loss to your capital and in turn your health.
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thank you very much…
Option strategies has been explained superbly in the Varsity, and I am indebted to varsity for the same. I have been searching for option strategies simulator all over the internet and found one at Tradingtuitions. More can be learnt here.
Excellent resource to understand what happens in real time, if one can enter the real option prices an build strategies. I have used it, and found it to be eyeopening. I have modified it a bit so there are ways to understand the strategies along with reward and risk.
I am sharing the excel sheet here,
This can help you build the strategies in sheet 1 by each leg. To learn about various strategies that are available based on market mood, use the sheet 2 and calculate the reward/ risk for each strategy.
The aim is to provide choices that can be found with little bit of research. I am thankful to Tradingtuitions and the knowledge given by Varsity in creating this revised file. I have not included the complicated, and costly strategies in this sheet, so that anyone new to options will not try something complicated and costly, just because it is there. Hope it helps.
Hi
Plzz tell me how much stt and other charges i hav to pay
If i left any stock futures of buy at the day of expiary…
Taking example of Reliance, this will be the charges for your Futures trade
Stock options are Physically settled so there are other charges as well.
Since your position is long you’re obliged to receive shares, which results in brokerage of 0.25% of Physically settled value and there is also additional STT levy of 0.1% of the contract value.
You can read more on Physical Settlement here.
scenario 1 :
if I want to buy reliance shares quantity (505 i.e. 1 lot) ; should I buy it from the cash equity
or
f&o physical expiry settlement is cheaper to me ?
scenario 2 :
if I already have 505 shares in my demat account and I want to sell them .
should I sell it in the cash equity
or
f&o physical expiry settlement is cheaper to me ?