Buying or Selling shares in cash market will be better option IMO. Doing it via F&O is tricky and riskier as well.
Hi i Got below information on zerodha,
on Short options there will not be any delivery obligations. as short seller already paid STT.
by this I understand on expiry, a seller can let a contract go without buying it?
but I observe something else
I short HEROMOTO call of 2600 strike at 90 on expiry, hero close at 2703, an option price nearly at 115.
I thought I have nothing to do and will observe a loos of around 6000.
but my contract note is showing phy_0000xxx, and on that a huge brokerage is charged.
I did not understand this.??
STT (Securities Transaction Tax) and Physical Delivery are two very different things. Yes, there is no additional STT on short options position on expiry as sellers of the option has already paid the tax. But if you hold Options position in Stock F&O on expiry and if it expires ITM, you are obliged to take/give delivery of shares depending on your position as Stock F&O are Physically Settled. You can learn about Physical Settlement here.
As explained above if your Stock Option expires ITM, you are obliged to take/give delivery of shares depending on your position. Since you were Short Call and it expired ITM you were obliged to give delivery of shares, to fulfill this obligation you need to have shares equal to stocks lot size in your demat account, failing to do so will result in a short delivery and there will be penalties levied accordingly. You can read on the consequences of short delivery here.
Hi there,
Thank you for the information, I have miss understood things, and thought it will be auto squreoff and I need not to do anything.
can you please tell me,
In this case I was not holding 300 shares of heromotoco, so how the settlement will be done for me.
yes you have shred a link but a specific answer to my case will help me much.
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You were holding Short ITM Option so on expiry you had to give delivery of shares, since you didnât have required shares in your Demat account to deliver, this would have resulted in Short Delivery and you wouldâve been charged some penalties for that.
What would be this at max, and how can i see this in my lager, I canât figure out it in my account. it should some huge money which is not tracked.
You can refer to the Consequences of Short Delivery post I linked you to, to know about possible penalties.
You can check Statements page on Console.
in my case expiry was on 30th July, so when this auction will happen, what will be T+2 day for my case.
I can see a loos of 2 lacks in my lager, but I am trying to understand it as it shows too many things.
can a loos of 2 lacks possible for this trade.
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You might want to correct this page âŚit still says about hitting with huge STT
If exercised 0.5% am I right sir?
It is 0.125% on the Intrinsic Value of the Option if you excercise.
How STT calculated on options, How far this is true https://www.quora.com/How-did-Chirag-Gupta-lose-24-lakhs-in-five-minutes-on-the-stock-market For example, If I buy bank nifty 31000 CE at 300, 2 lots and it becomes 3000, how STT is calculated?
From out of the money 31000 CE at 300 into in the money 31000 CE at 3000
If you square-off your position before expiry, STT applicable will be at 0.05%, you can easily calculate this using the brokerage calculator.
If you leave your position to expire, and it expires ITM then the STT applicable is 0.125% on the Intrinsic Value of the Option.
For example, you have bought 31000 CE and Bank Nifty expires at 34000, Intrinsic Value of your Option will be 3000 (Spot Price - Strike Price).
STT applicable for your position will be 187.5 (3000 * 0.125 / 100 * 50 (2 lots of Bank Nifty)).
ow far this is true https://www.quora.com/How-did-Chirag-Gupta-lose-24-lakhs-in-five-minutes-on-the-stock-market
How did Chirag Gupta lose 24 lakhs in five minutes on the stock market?
This story looks like it is from 2017, then STT was applicable on total contract value. Since September 1st, 2019, STT is applicable on Intrinsic Value of the Option.
IF buy options 29000 CE at 350 1 lot in monthly expiry not weekly and bank nifty goes to 37000,
How much charges I need to pay, is there any co-lateral charges or interest charges and transaction charges I need to pay for the entire month for holdingâŚ
You cannot use collateral margin for buying Options, also there are no interest charges.
You can easily calculate charges for trading Options, here.
If you leave this Option to expire, as it is expiring ITM, youâll be charged STT at 0.125% on the Intrinsic Value of the Option.
You have bought 29000 CE and Bank Nifty expires at 37000, Intrinsic Value of your Option will be 8000 (Spot Price - Strike Price).
STT applicable for your position will be Rs. 250 (8000 * 0.125 / 100 * 25 (1 lots of Bank Nifty)).
Upon expiry, OTM Options expire worthless. While ITM Options are settled at Intrinsic Value.
If Bank Nifty expires at 37000, your 29000 CE will expire with value of 8000.
Your net P&L will be Rs. 7650 (8000 - 350 premium paid to buy the option) minus brokerage and other charges, these you can easily calculate here.
Calculating P&L for multiple strikes is little complex. Would suggest you check out Sensibullâs strategy builder, which will help you visualise your P&L.
Yes, you can purchase Options of any expiry and strike price.
Also, would like to suggest you to read this module on Varsity. Will help you understand Options better:
