USDINR Option Selling Square off

[Vipul_Raval]

If USDINR sold option expires OTM then what will happen ?

Do we need to square off before the expiry ?

I am new to USDINR so dont know about it.

[ShubhS9]

You don’t have to square-off the position. As it is OTM, the option will expire worthless and you will get to keep the premium recieved.

Would suggest you check out this module on Varsity to learn more about Options:

Options Theory for Professional Trading - Varsity by Zerodha

[Vipul_Raval]

ok i thought there will be tax on it if we dont square off like in nifty.

[Aoz]

even if it’s Nifty OTM, you don’t have to square off since it will expire worthlessly. Explained by @ShubhS9 here:

@ShubhS9

Index Options (Nifty and Bank Nifty, Nifty Financial Services) are cash-settled.

• If your Option expires OTM, it expires worthless.
• ITM Options are settled at their Intrinsic Value.

And depending on your Profit/Loss money will be credited to / debited from your account.

Also, if your Long Option position expires ITM, exchange will levy STT at 0.125% on the intrinsic value. There will be no STT on the Short position as STT is already paid when you sell the option. More details here