Stock PUT Option ITM Expiry - Illiquid

for expiry settlement, the future close price will be considered same level as spot price. isn’t it. So if spot expired at 449.65, the future settlement price will also be 449.65 for dec expiry.

(The last traded price of future could be different, but for settlement it would be same as spot closing price on last day of expiry).

You are right thanks :smiley:

Very good article related to the recent Hindalco 450 Put Trade Fiasco. Must read for all those who trade in NSE Options. This needs to be fixed ASAP, otherwise similar issue will happen in some other counter, during the next expiry.

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If I sell otm put option and it expired in the money and i have not squred off. If i am ready to take delivery, what will be the charges and what will happen to the margin paid to sell one lot of put option. pls some one explain this.

Blocked Margin will be released after expiry. You will keep the premium and will be assigned shares at strike price. Delivery brokerage will be 0.25% plus taxes .

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will all the margin be released except taxes or the intrinsic value will be deducted from the margin?

If you have required “available cash”, that will be used to buy shares at strike price, and the blocked margin will be released.

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so if i sold a put option of underlying stock at a strike price of 1000. 12 Rs is the premium collected. the stock price expired at 995 and I have funds to take delivery. If i took delivery i will get entire margin paid. what will happened to premium collected? will entire premium go to buyer or only the intrinsic value 5 rs and remaining i will receive?

If it expire 950 do i need to pay 50rs even though i preferred to take delivery?

Whether ITM or OTM , on expiry, premium goes to zero, meaning seller keeps all of it. The concept of put option is tat if price ends below strike, shorter is contracted to buy shares at strike (obv higher than current price) from put buyer.

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this means i no need to give back the premium collected and no margin deducted. i need to pay the money to take delivery based on the strike price?

As per my knowledge otm expiry premium goes to zero but itm expiry premium is equal to intrinsic value. is it right or not?

  1. Yes. You keep the premium after expiry.
  2. Any blocked pledged margin will be reversed . You pay in cash to take delivery.
  3. Premium fluctuates until expiry. But if you have not squared off, then after expiry, premium goes to zero, option seller keeps initial premium collected and it’s all about physical delivery.