Got options:) Thankyou buddy!
I think beginners get confused because they see the term “contract” thrown around 
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One thing that confuses and not becomes clear in starting is that when i sold a option, i’m -1 in my position. And the buyer is +1.
To dissolve my -1 position, i have to get contract for same strike price and date back. Well anyhow, someone said, if you do options, you will have options, but if you do futures, you will have no future😂
On a side note:
Be very careful with option selling. Plan your short options not looking only at the margin, but instead consider how much you could lose if Nifty suddenly moves against your position.
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Look up the word “fungible” on Google.
Both options and futures contracts are fungible.
So, your statement:
Should be modified to:
To dissolve my -1 position, I have to get A contract for the same strike price and date.
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Right! That’s why i think, selling and buying options will take months learning and experience.
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You are holding one short contract, which means there is atleast one long contract holder as well. Let us keep him aside for a while.
Just take note that although you are willing to buy, he is not willing to sell yet.
Now some new traders with no prior position may come in and sell you the contract that you want. This will cause the transfer of your short position to him. But assume there are no fresh players as well.
In this case wait till expiry. Everybody has to compulsorily settle then. (whatever are ITM) So exchanges will forcibly settle you with that earlier guy we kept aside earlier.
It is like a magnetic or electric field. Its always a bipole. If you have a short contract then long side must exist.
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Assume that you are going to market to sell sona (not babu sona) to ‘X’ here X be the buyer of that sona at ‘Y’ price. If ‘X’ would be satisfied the quality of the sona than he will buy it and vice versa for buying. But if ‘X’ reject the bid and move on then will you able to sell that sona. The answer is No and leave you with sona and vice versa for the buying . With assuming that instead of sona you have contract then you are squaring off from the contract then for that you have to buy the contract for that there should be seller who wants to replace your position or want to exit the position / square off, and if this order has been completed you will be out of position.
But if there would be no seller for the contract you wont be able to square off the sell position. Ending you for the expiry.
And Profit and loss is upto the market. If there no oi in the contract you will still see zero ltp. If there is OI then this is due two position of contract sell and buy of same contract means that 100 OI refers to 100 position of buy and 100position of sell with total volume of 100 (or could be more depending on trade done on the day but minimium you would see is 100).
And this profit or loss could be seen due to intrinsic value+ time value. And there is intrinsic value for ITM but there is no intrinsic value in OTM and whole premium is time value means that even if market dont more you would loss 99.9% of value leaving behind 0.05 to be seen on the option chain. And this 0.05 is save due that chart donot load at 0 price. But this 0.05 is gone from your wallet after the expiry.
Hope this will save your sona. Oh sorry! Hope this will solve your concern.
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Right, but i think, generally such a situation is very rare to happen atleast in index.
Helped and learned more things, thanks buddy:)
Not a single index option even index future with oi ends up in expiry. Don’t know why people donot exit position before expiry occur and you would see pitty much OI on expiry as they could have a lot of dads money to spend in air. You should check on upcoming expiry than you will have proof in hand.
use:
Kite
Sensibull
Opstra
niftytrade.in
niftyoi
and many more to check for proof.
you can see open interest under upper circuit in kite mobile.
Looks like they are not concerned sufficiently towards their money or maybe due to lack of awareness, but things apart, your answers make complicated terms very simple to understand, thanks, will surely ask:)
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What does this statement mean, can you elaborate?
I should say that watch for upcoming expiry there you will see most of OI ends up in expiry whether its ITM, OTM,ATM. Player donot square off there open position at expiry making there contract expire.
OTMs expire worthless. Why do you want to close them.
The ones who let ITM expire I believe they have a hedged position which are both in the money.
Even I let them expire and not square them off.
If I have futures long and call short which is ITM I always let them expire unless I want that margin for something else.
Some broker deduct amount as notional charge on that hedged ITM contract and that broker who charge is at 0.1% of the difference in contract notion value b/w those hedge position.
Not for index. I think that’s applicable only for stock derivatives. Correct me if am wrong @ShubhS9
You must exit the position before expiry, many people do not and that is what causes confusion. It takes a lot of experience to understand options, give time to learn. Good luck!
Why so ?? Any particular reason ?? If I don’t have alternative use of the margin I would rather prefer to let them expire worthless as an option seller.