I want to analyse a mutual fund where can I find the past values of the benchmark TRI
Help me with this i can’t understand. I haven’t squareoff my position. I am bit confused and scared of getting a huge penalty, please help me!!
You will not have any penalty. U will retain the premium received at the time of sale.
this option expired otm…so it will expire worthless and you will lose all premium paid .
so if Nifty on expiry is 16000, then the 16500 PE will having an intrinsic value of Rs 500.
In that case will the tax of 0.125 % be charged on 500 X 50 = 25000
i.e. a tax of Rs 31.25 ?
Right, the STT will be on the intrinsic value (500 * 50). Also, the STT is applicable only on Long ITM positions, if you have a short position the STT is already paid when the position is taken. Please check out this post for more details: Starting Sep 1st, finally no more STT trap on exercised options :)
have buy PE option and margin required 1 Lac 43 thousand and I have forget square off my position then I have loss 8000 then what can do?
what PE option required a 1.43 lakh margin? Do you mean to say you purchased PE with cash ?
@ShubhS9 If I don’t square off my short index options on expiry day, at what time will the margin blocked be reversed back to my account?
Anyone having any experience in this, please help.
End of the day only the margin will get released after the trade process got completed. You can use that amount the next day for trading.
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@ShubhS9
Dear Zerodha, kindly advice on this situation
If there is ITM option sell position with proper option buy hedge (all quantity hedge, all same expiry ) - both in Nifty and due to any gap opening the ITM option sell becomes deep ITM with no liquidity - but net loss is capped due to hedge and we are not squaring the hedge, and using the option sell credit received for anything else till expiry
a) then due to margin fluctuation will one be needed to add more money for the option sell leg , or it will not be needed as total loss is locked (due to option buy hedge) and as hedge is gaining points the margin needed for option sell leg will actually reduce and hence its covered due to the original credit received via option sell at the time of position making or option sell leg margin fluctuation will be considered in isolation and not in tandem with option buy hedge
b) if one is unable to add more money for fluctuating margin for the option sell leg (where as option buy hedge is intact) and zerodha is also unable to square off due to ITM illiquidity, then there is penalty like interest rate for the extra margin not added if yes how much % and from which day the penalty interest starts and this penalty is exchange margin penalty + also is there any kind of zerodha interest penalty for the shortage
c) does the following will give same benefit if option sell leg and option buy hedge both are different expiry still option sell margin will be considered in tandem with the hedge
d) doe the above is also true for Nifty or BN Future + Hedge where fluctuating margin needed for Future will be considered in isolation or in tandem with the hedge gaining power when price is against us
Can you please clarify this ,
For example:-
CASE 1 : I positional short sell BANK NIFTY 45000 PE & BUY 45500 PE FOR HEDGE when BANK NIFTY is 44000 .
BANK NIFTY 45000 PE SHORT at 1100 one lot
BANK NIFTY 45500 PE BUY at 1550 one lot
If I don’t square off before expiry, What will happen during expiry? what will happen in this situation? It will automatically square off? What will be the charges?
CAN YOU PLEASE CLEAR MY QUERY REGARDING THIS . THANK YOU
Please reply
Depends on where Bank Nifty closes on expiry day.
If Bank Nifty closes at 44000 on expiry day, your short position in 45000 PE will be ITM and will be settled by the exchange at intrinsic value. In this case, the intrinsic value will be Rs. 1000 (Strike Price - Spot Price).
As you have sold at Rs. 1100 and it is settled at Rs. 1000, you will be in profit of Rs. 100.
The long position in 45500 PE will also be ITM, and will be settled by the exchange at intrinsic value. In this case Rs. Rs. 1500 (Strike Price - Spot Price).
On this position, you will be in loss of Rs. 50, as it is bought at Rs. 1550 and settled at Rs. 1500.
Your net P&L for both positions will be Rs. 50 * Lot Size.
If Bank Nifty closes at 46000 on expiry day. Both short 45000 PE and long 45500 PE will expire worthless as these are OTM.
You will get to keep entire premium of Rs. 1100 for the short position. While on the long position, you will lose the entire premium paid (Rs. 1550). Net, you will be in loss of Rs. 450 * Lot Size on both positions.
Coming to charges. These remain the same. Only change is, if the Long option position expires ITM, exchange charges STT at 0.125% on the intrinsic value.
Taking the example of 45500 PE expiring ITM. The intrinsic value if Bank Nifty closes at 44000 on expiry day is Rs. 1500. The applicable STT will be Rs. 46.875 (1500 * 25 lot size * 0.125 / 100).
If the short option position expires ITM, there is no additional STT, as it is already paid when option was shorted.
If the option expire OTM, it’ll be worthless, again no additional STT on this.
Would suggest you go through this module to learn all about options trading:
If you do not square off your options position, it will continue to exist until the expiration date. If you still have not decided to close or exercise the option by the expiration date, the option will either be automatically exercised or expire worthless. The decision to exercise the option or not will depend on the option type and the market price, and if the option expires worthless, you will lose the right and obligation to the option.
Sir, thank you so much for your explanation.
I sell Index OTM strikes and square off at 0.1 on expiry.
Can you please advise -
1, whether it is mandatory to square off (buy back) sold Call/Put Index OTM strikes on expiry .
2. is there any penalty if I dont square off (buy back) the sold Index OTM strikes and leave the position open on expiry.
3. what happens if I leave the sold OTM strikes open at expiry - will the OTM strikes be squared off at 0 or 0.05 ?
Thanks in advance.
Hi @Amit_P
OTM option contracts expire worthlessly. The entire amount paid as a premium will be lost. Brokerage will only be charged on one side, which is when the options are purchased, and not when they expire worthless on the expiry day.
No. It’s not mandatory. You can let them expire worthless.
No. There’s no penalty.
You can get to have the entire premium.
But one point, if you think there’s a risk that option premium may somehow spike from 0.1-0.2 rs, it’s better to exit from overall risk point. Otherwise, you can let it expire worthless.
You can read more about here: What happens if the option contract is not squared off on the expiry date?.
Sir, thank you so much for the explanation and advise.
Hey, Say that i have brought a nifty call option at 0.10 *7000 and required margin is 700 rs and say i dint square off the position on expiry and now it is worthless. so do i lose 700 or do i lose even more than that?