What worst would happen to ITM long and short position at exp?

General
1

If I short banknifty (Index) ATM 30000 CE and long banknifty 29000 CE, 30 days before expiry

At expiry banknifty trading near 35000

  1. Can I exit above strikes at fair price? (mean can I get liquidity there?)
  2. If I not able to exit both long and short positions, what worst would happen?
  3. What right thing should I do?

Thank U

@siva @ShubhS9

2

These strikes will be deep ITM, liquidity will be less in these strikes.

As your Options are ITM, these will be settled at intrinsic value and any profit or loss you’ll be making will be credited to / debited from your account. There is similar post explaining this in detail: Settlement of index options on Expiry - #2 by ShubhS9

1 Like
3

Ok…So it means

If market goes from 30K to 33K
If I short 30K ce @1000 becomes @4000 as ITM
And long 31k @500 becomes @3500 as ITM

Then if I let it expire
Short option will settle @3000
And long option will settle @2000

Then in short position whatever bid/ask…It will exit only @3000
And long position …will exit @2000

I just need to pay extra STT (0.125%) only for long position

I should not worry about extra margin?
Means there no worry about delivery of shares for index options?

Please confirm it
And thanks for reply sir @ShubhS9 @siva

4

Right, upon expiry ITM Option positions will be settled at the intrinsic value.

Yes, the STT of 0.125% is applicable only on Long ITM Options. This will be charged on the intrinsic value.

Index F&O (Nifty, Bank Nifty, Nifty Financial Services) are cash settled, you don’t have to maintain extra margin during expiry.

5

Thanks a lot @ShubhS9
That means…If I get unfair ask/bid price
Then, I can wait for expiry to settle automatic at intrinsic value

Looks there is no such worry for index buyer/sellers