I posted this question in zerodha but somehow did not understand… so pasting it here as well. Please clarify…
Say I have one lot of Reliance (250 shares) in holding and I purchased them at 2200.
Now I sold call of OCT 2600 CE at premium of 62. This means I got premium of 15500 (62*250). Now during expiry it closes at 2650 which means it is ITM, which means I need to give delivery.
But how does PnL calculation works in this case?
I mean if I had sold the holding stock in market then I would have got [2650-2200] * 250 which is 112500, but in this case of option physical settlement since i need to give delivery of stock, it gets deducted from account, which means essentially I am making no much profit except the premium of 15500. Am I getting any benefit of stock price high other than premium? Not sure if I understood physical settlement in case of call writing.