Will an option have its intrinsic value even at expiry?

General
1

Will an option have its intrinsic value even at expiry?

Example: On the expiry day, Nifty ends at 7980, can we be sure that the Nifty 7900 CE will have its intrinsic value of Rs.80 when it expires?

2

Yes, if an option expires in the money…it means there is value to the option contract, and this value is called the intrinsic value.

The example you’ve quoted is accurate.

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3

Yes, the option will have its intrinsic value if it expires ITM to current month NIFTY FUTURE Price.

Also, as Zerodha notifies, it is better to square off the option contract trade if it is in the money on expiry day to avoid fees.

4

Hi Karthik, This means that the premium of the option will be Rs.80. Am i right?

5

Yes, you are right, the premium would be settled at Rs80 at expiry.

6

HI,
Today NiftyFut expired at 7955.05. But Nifty 7950CE was 3.40 even though its intrinsic value is 5.05. Why is this so?

7

That’s the last traded price, IV will be 5.05

8

So, i will get 5.05 if I had the position of this option and let it expire. Is that correct?