Trailing stoploss and general query

dear team
plz answer these queries

1)can i apply trailing stoploss in banknifty options?

  1. if i have purchased a lot of banknifty 24300 ce at 350 premium (350*25 = 8750) , what could be the maximum loss i will have if nifty goes bearish… (say for example nifty drops 400 points) will the premium goes beyond zero? like -100?

  2. if i enter a position in cipla 680 ce and if im unable to exit the position due to technical error from my end or network connectivity issues. help me find the detailed article where in i can learn about settlement process of options.

thank you…

As long as the stop price of the banknifty is at or below the strike price… You max loss will be the premium paid at the expiry… But if you square off your position before the expiry your loss will be little less ( selling at the current market price - option premium)

It’s depends whether your options expires ITM or OTM … If your options expires IMT at expiry and you if you will not be able to square it off… Then you have to take the delivery of the underlying…
If it expires OTM… Then you will loose all the premium paid…

I would like to correct it if any mistakes was there… @ShubhS9

:pray::pray:

sir

in case if the option is MIS( example: if i buy cipla 680 ce MIS at 10:am (lost size 1300 * strike price 24 =31200)and unable to close by 3:20 pm what will be the penalty . plz reply considering both scenarios
1)if it closes ITM closes at 28 strike price
2) as you have mentioned if it expires OTM . .will i loose entire money 31200 rupess?

thank you …

FYI Long Option positions aren’t allowed on last two days of expiry.

Addressing your query assuming you have taken position before this.

If you do not square-off your position by cut-off time. RMS will square-off your position, for this you will be charged Rs. 50 + GST.

Though, if there is high volatility or lack of liquidity in such scenario even RMS might not be able to square-off your position, in that case your position will be carried forward to the next day under NRML order type.

Physical settlement only happens on expiry day, not before that.

Assuming you held this position on expiry day and it expires ITM, in this case as holder of Call Option you are obliged to take delivery of underlying shares. You can learn more about Physical Settlement here.

Yes, when your position expires OTM, it expires at 0 value, so as an buyer of Option you lose all the premium paid.

dear sir
thank you for reply
plz elaborate

  1. if it expire OTM in MIS order …cipla 680 ce at 24 10 am and by 3:20 pm it goes unsold and strike price is 20. .what will be the penalty?
    and to be on safe side i dont enter any long position in expiry week… i try to avoid entering any long position and never held any position till expiry.

  2. plz explain me how to put trailing stoploss in options… ( sorry this question i posted here.)

thank you.

As I explained above.

If you do not square-off your position by cut-off time. RMS will square-off your position, for this you will be charged Rs. 50 + GST.

Though, if there is high volatility or lack of liquidity in such scenario even RMS might not be able to square-off your position, in that case your position will be carried forward to the next day under NRML order type.

Also, Options don’t expire before expiry day, so even if your position is OTM before expiry, it might still have some value. In that case your Buy Price - the price at which you exit your position at will be your P&L.

You cannot set automatic trailing Stoploss, you can use Stoploss or GTT (for overnight positions) and manually modify the Stoploss as position moves in your favor.

For better understanding about Options I’d suggest you to read this module on Varsity.

1 Like

Why sir… Why long options position are not allowed in the last two days of expiry???

Yes it is true due to the change in the physical settlements of all ITM stocks options there is a huge risk which broker have to bear… but also the margin requirements are also increased for the last two days… Right sir??

Is this Zerodha’s policy… Or this rule is set by exchanges.??

Second doubt:- sir is this restrictions is for NRML or for MIS also.?

Please clarify sir i got confused… . :pray::pray::pray:

@ShubhS9 @siva @Gautam