Stock options understanding

General
1

Suppose,

I sell infy call options, on expiry, if i don’t square of the position i have to give the delivery which means infy stocks will be debited from my demat account?
I buy infy call options, on expiry,if i don’t square of the position i have take the delivery which means infy stocks will be credited to my account?

I sell infy put options, on expiry,if i don’t square of the position i have take the delivery which means infy stocks will be credited to my account?
I buy infy put options, on expiry,if i don’t square of the position i have to give the delivery which means infy stocks will be debited from my account?

Is my understanding correct?

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2

Yes, your understanding is correct. In all the above cases, physical settlement will happen only if the Options expire ITM, if Options are OTM, it will expire worthless and there won’t be any physical settlement. You can check out more information on physical settlement here.

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3

So,

Lets say, I sell infy oct 1800 call option and 1600 put option.
Assuming oct monthly expiry . Infy is at spot 1700. Both my option are OTM . so i am not obligated to give delivery or take delivery after 28-10-2021 3:30 P.M. if i dont square up my position.

I can collect premium.

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4

Right. If your options expire OTM, thise will expire worthless, there will be no physical settlement and as an option seller, you will get to keep the entire premium received.

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5

My main concern is , Can i have the position as it is and not square up.
Because on monthly expiry spreads may become wider.

6

Yes, you can let your position expire. As explained above, if the position expires OTM, there will be no physical settlement and you will get go to keep the premium received.

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7

Thank you.

8

Hi @ShubhS9

Lets say i have 100 infy shares in my holding.
I sell 1900ce infy (lot size is 300) for nov expiry.

If infy spot on nov expiry is 1950. instead of squaring the call options positions ,
Can i buy 200 infy stocks on expiry day and use the total 300(200+100) for delivery?

9

No…I don’t think that will do because you must have the whole lot in your demat…so you must buy 200 shares two days before expiry I believe…some expert can throw more light on this…

10

You need to have sufficient shares in your demat account on the day of expiry, else it will result in short delivery. Explained here.

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11

@ShubhS9
Why some stocks are not included in F&O? How long does it take for a company to come under F&O once the stock is listed

12

Stocks have to meet certain criteria set by regulators to be included in F&O segment. You can check out more on this here.

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13

Hi @ShubhS9 @Prayag @siva

The stock option for DEC month expiry, PE option, upper circuit is reduced each day , Why?

Eg: Day 1 upper circuit was 49, Day 2 upper circuit was 39, Day 3 upper circuit was 29, Now 19 . Why?

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14

Does anyone know @Sensibull vip industries,adani green script code name for sensibull option chain

15

why some stocks are marked trade to trade?

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16

VIP Industries and Adani Green do not trade in F&O segment. You can check out the list of stocks that trade in F&O segment here.

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17

Hi,

Lets say i buy stock put option , which means on expiry i have to give delivery if it expires in the money. Eg : bharti airtel put option. its quantity is 1886.

Assuming i am not happy with the price to which it has to squared up.

So i will buy the stock of bharti airtel 1886 quantity and give this for delivery. (i will do this one week before).

Is this ok?

19

Price doesn’t matter. You have to just deliver required qty irrespective of price considering option position is ITM

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20

Assume i didn’t have bharti airtel in my demat account at the beginning of the month. But bought mid of the month

21

You can buy underlying shares after taking option position. All you have to make sure is to have underlying shares in your demat account on expiry day for delivery.

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