What if I dont square off my short options on expiry

F&O
1

Tried searching for this and all of the answers were regarding long options that expired either ITM or worthless. My query is the reverse…what if I had shorted a stock option and on expiry day I am in profit (for example say I shorted an option at 5 and at expiry it was at 0.05 or 0 or whatever).

Now if I did not square off my long positions, then I would be forced to purchase the lots I had bought - in cash. What happens for short options? Will it be automatically squared off?

2

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I hope this helps you. Since you had shorted an option and in profit at the time of expiry, the option will be ITM.

3

Thanks for the reply Ajay. But your bit abt my option being ITM at expiry seems to be wrong. For example say I short a reliance put of 1000 strike price and if at expiry reliance closes abv 1000, then the put option would be OTM

It seems u can only hold ITM options for delivery and OTM options (if short) would get squared off in profit

4

Yes, This is correct.

5

@ajaybgowda Is this default now as per latest SEBI guidelines or people still have the right to excercise for delivery?

6

Hi @Vijay3 All index options are cash settled whereas ITM stock options are physically settled compulsorily and ATM/OTM are cash settled(seller receives the premium paid by the buyer).

7

Index option cannot exercise bro, only stock options

8

My question is only wrt stock options. You cannot buy or sell index.

9

Check this out