What if the index option short (PE) is expired ITM?

F&O
1

I have sold put option of MRF at a strike price 140000. My position is going to expire ITM…
What will happne if i don’t square up the PE on expiry

2

Hi @M_kashyap

In case, Your puts (sell) expire in the money, you would have to take physical delivery. We’ve explained this process in detail in our support article.

3

Ok thank you very much sir…

And what will happen if my PE short expires OTM… will i loose any money?.?

4

@M_kashyap This is profit for you. You’ll get the entire premium you received when you initially sold the put with no obligation.

5

Its great… thanks a lot sir…

6

Entire premium or total premium less intrinsic value of PE… ??

7

For OTM, the intrinsic value is zero, as the market price is above the strike price. You, as the seller, will get to keep the entire premium as OTM expires worthless for the buyer.

8

Ok thanks a lot sir :pray: :+1:

9

Even for an ITM option, I get to keep the entire premium, but I would have to take delivery at the price at which I sold the put. Am I wrong?

10

Yea, if MRF expired at 136,300 and you need to take delivery at 140,000. You will be buying at a higher price of 3,700 per share.

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