iCharts Discussions

[Hydrogen]

Posting my Query, so that anyone can help

I am planning to play Verticals Spread on Stock Options, But as you people know that Options on Stock is not liquid.

I want to know that what will happen if I am unable to close my vertical spread till the day of Expiry.

I will take here an example

Lets taks RELIANCE. On 30th May Reliance LTP is 968.7 and on 30th June Reliance LTP is 969.15

On 30th May, I decided to create a Vertical Spread

I purchased June 980CE @ 21 and Sold june 1020 CE @ 8.90

On 30th June (Expiry Date) I want to Square of my position

Sell June 980 CE @ 0.05 & Cover June 1020 CE @ 0.05

But I found that there are no buyers and Sellers and I am not able to Square off my position till the end of day.


On 30th June I am making a loss of -12 on my above Trade. What will happen after that.

I know that Since the option never went into in the Money, It will expire at 0.

How much STT will be charged on me. In the above example I am in Loss.

If suppose in the above example If I am in profit, how much STT will be charged.

Can I keep the option and let them expire on it's own, If there are no buyers & Sellers

[jk99]

i hoped option is not for trading ,it is only for insurance used /regards

[Hydrogen]

[Gemini]

Hydrogen:

Situations and suggested actions at expiry

Call Options-
- If Market price (Spot) is lower than Sold / bought strike price, do nothing. (In your example - nothing needs to be done).

- If market price (spot) is more than sold / bought strike price, square off.

Put Options-
- If Market price (spot) is higher than Sold / bought strike price, do nothing. (In your example - nothing needs to be done).

- If market price (spot) is lower than sold / bought strike price, square off.

JK99: Options are used for trading ..

Regards.

[Hydrogen]

[jk99]

hi hydrogen,
now clossed is 8866,
let us apply one technique as,
buy 3 times put of8700 and 1 time call of 8900 for oct expiry ,
after market settle on (when market open)
we will exit near about double our investment or if market goes up ...let us see how put adjust ,,,(i am leaner not expert)
regards

*learner

[Hydrogen]

[Alchemist]

Hi - In your original example you have said you want to exit both options at 5 paisa which clearly means both options are expiring OTM and eventually will expire at 0. No additional STT is payable if you let them expire worthless as both legs are expiring OTM


What if either or both options are expiring ITM? read on ...


http://zerodha.com/z-connect/queries/stock-and-fo-queries/stt-options-nse-bse-mcx-sx


Cheers
SH

[Hydrogen]