WRITING A CALL OPTION IN OTM and LETTING IT EXPIRE WORTHLESS

F&O
1

I am new to options.
My Doubt:
Lets assume that I am writing an index call option in OTM. We know that unless index surges to unexpected levels, the option bought in OTM is going to expire worthless(MOST CASES). So as an option seller should i buy back the same option at lower price or should i let it expire worthless?
ex: lets say i sold a contract at Rs. 50 and if i buy back the same at Rs. 5 on the day of expiry, then my profit for each share is Rs. 45.
But it is anyways going to reach Rs0.25 or Rs. 0.05 by the day’s end. So instead of buy back at Rs. 5 shall i let it expire and keep all premium paid to me ??
Is there any catch here ?
Will i be not able buy back if it is mandatory to buy back a contract which is sold first?
or Will i be asked tobuy the index if i let it expire?
PLEASE CLEAR MY DOUBT. ALSO PLS CLEAR IF THIS IS A WRONG PROCESS

2

Hi @Arjun_Arjun1, welcome to Options trading.

This query is commonly asked by members here.

You may click on below thread which is identical to your query:

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