indiTraders - Forum for the Active Indian Trader  

Go Back   indiTraders - Forum for the Active Indian Trader > Markets > Futures & Options

Futures & Options Futures & Option Markets

DPonline
Reply
 
Bookmark and Share LinkBack Thread Tools Display Modes
  #1 (permalink)  
Old 26-03-2017, 04:41 PM
rajputz's Avatar
rajputz rajputz is offline
Alampanah™
 
Join Date: Feb 2010
Location: Una
Posts: 691
Thanks: 304
Thanked 1,289 Times in 525 Posts
rajputz is a splendid one to beholdrajputz is a splendid one to beholdrajputz is a splendid one to beholdrajputz is a splendid one to beholdrajputz is a splendid one to beholdrajputz is a splendid one to beholdrajputz is a splendid one to beholdrajputz is a splendid one to beholdrajputz is a splendid one to beholdrajputz is a splendid one to beholdrajputz is a splendid one to behold
Default Querry Regarding Option Selling

I have never practically done this and have a query.

Nifty is at 9108 right now. If I sell call of 9200 of March 1 Lot, then what will happen to my position on last Thursday if the market closes below 9200.

PS - I know it will go to 0.05 but is there any other side effect or thing I don't know if I hold it to closing i.e. 3:30 pm.

Another case. Reliance is at 1286. What if I sell call of 1350 and on Thursday price closes below 1350 and I keep holding my position till expiry.

Simple answer please.
__________________
Regards

rajputz

My Blog - https://katwalassetmanagement.blogspot.in
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
The Following User Says Thank You to rajputz For This Useful Post:
  #2 (permalink)  
Old 26-03-2017, 06:33 PM
Ajax i4u's Avatar
Ajax i4u Ajax i4u is offline
indiTraders VIP
 
Join Date: Mar 2009
Posts: 3,730
Thanks: 4,370
Thanked 10,208 Times in 3,106 Posts
Ajax i4u has disabled reputation
Default

Originally Posted by rajputz View Post
I have never practically done this and have a query.

Nifty is at 9108 right now. If I sell call of 9200 of March 1 Lot, then what will happen to my position on last Thursday if the market closes below 9200.

PS - I know it will go to 0.05 but is there any other side effect or thing I don't know if I hold it to closing i.e. 3:30 pm.

Another case. Reliance is at 1286. What if I sell call of 1350 and on Thursday price closes below 1350 and I keep holding my position till expiry.

Simple answer please.

Nifty 9200 call is 15.5 rs today. If you short it at 15.5 tomorrow. you will receive premium of 15.5 *75 (minimum lot) minus txn charge in you account. However, a margin will also be blocked in your account, around 50K.

Now if Nifty closes below 9200 on Thursday 3,30 pm. and you don't transact on this. the margin block will be removed. and you will be richer by 15.5*75 rs (minus txn charges on first leg only)

Same with reliance option.


However, if Nifty closes above 9200, say 9250, then on expiry
9250 -9200 i.e. you will pay exchange (50 - 15.5)*75
the amount will be deducted from your margin money and balance released.

hope its clear.
__________________
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
The Following 2 Users Say Thank You to Ajax i4u For This Useful Post:
  #3 (permalink)  
Old 26-03-2017, 11:36 PM
no1lives4ever no1lives4ever is offline
Newbie
 
Join Date: Jul 2009
Posts: 3,561
Thanks: 22,078
Thanked 6,029 Times in 2,568 Posts
no1lives4ever has a reputation beyond repute
no1lives4ever has a reputation beyond reputeno1lives4ever has a reputation beyond reputeno1lives4ever has a reputation beyond reputeno1lives4ever has a reputation beyond reputeno1lives4ever has a reputation beyond reputeno1lives4ever has a reputation beyond reputeno1lives4ever has a reputation beyond reputeno1lives4ever has a reputation beyond reputeno1lives4ever has a reputation beyond reputeno1lives4ever has a reputation beyond reputeno1lives4ever has a reputation beyond reputeno1lives4ever has a reputation beyond reputeno1lives4ever has a reputation beyond repute
Default

Originally Posted by Ajax i4u View Post
However, if Nifty closes above 9200, say 9250, then on expiry
9250 -9200 i.e. you will pay exchange (50 - 15.5)*75
the amount will be deducted from your margin money and balance released.

hope its clear.

Isnt there a different set of higher than normal transaction charges in case option expires in the money?

-- no1lives4ever
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
The Following User Says Thank You to no1lives4ever For This Useful Post:
  #4 (permalink)  
Old 27-03-2017, 12:41 AM
Ajax i4u's Avatar
Ajax i4u Ajax i4u is offline
indiTraders VIP
 
Join Date: Mar 2009
Posts: 3,730
Thanks: 4,370
Thanked 10,208 Times in 3,106 Posts
Ajax i4u has disabled reputation
Default

Originally Posted by no1lives4ever View Post
Isnt there a different set of higher than normal transaction charges in case option expires in the money?

-- no1lives4ever

If you square off then transaction charges apply on value of option you transacted at. Sometimes broker squares off (even if you let it expire) to earn commissons ( I have seen ICICI do it) .

But I think if you let is expire, why should there be any transaction charges. Let me check on this expiry
__________________
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
The Following 3 Users Say Thank You to Ajax i4u For This Useful Post:
  #5 (permalink)  
Old 27-03-2017, 03:05 PM
kkseal kkseal is offline
Hip-py
 
Join Date: Apr 2009
Posts: 4,978
Thanks: 6,571
Thanked 9,571 Times in 4,123 Posts
kkseal has a reputation beyond reputekkseal has a reputation beyond repute
kkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond repute
Default

No They don't I've done it with ICICI.
__________________
'Growth & Value are joined at the hip' - Warren buffet
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
The Following 4 Users Say Thank You to kkseal For This Useful Post:
  #6 (permalink)  
Old 28-03-2017, 09:39 AM
novicetrader's Avatar
novicetrader novicetrader is offline
Regulars
 
Join Date: Aug 2015
Posts: 956
Thanks: 1,338
Thanked 1,320 Times in 730 Posts
novicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to behold
Default

Quote:
On 25th Jan 2017, the expiry for January contracts, I had bought 8600 Nifty calls at 3.25 pm for Rs. 0.05 as I was 100% sure that Nifty will close above 8600 based on my 25 min weighted average price calculations. True to my expectations, Nifty closed at 8602.75. I had bought 3000 lots of Nifty 8600 call options at 5 paise, paying a premium of Rs. 11250. By the numbers, you can see that I should have made a profit of Rs. 6,07,500 (2.7* 2.25 lakh) right?

from web pointed out by a friend of mine
__________________
WILD
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
The Following 2 Users Say Thank You to novicetrader For This Useful Post:
  #7 (permalink)  
Old 28-03-2017, 02:46 PM
Ajax i4u's Avatar
Ajax i4u Ajax i4u is offline
indiTraders VIP
 
Join Date: Mar 2009
Posts: 3,730
Thanks: 4,370
Thanked 10,208 Times in 3,106 Posts
Ajax i4u has disabled reputation
Default

Originally Posted by novicetrader View Post
from web pointed out by a friend of mine

but what happened in the end (net)
__________________
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
The Following User Says Thank You to Ajax i4u For This Useful Post:
  #8 (permalink)  
Old 28-03-2017, 03:28 PM
novicetrader's Avatar
novicetrader novicetrader is offline
Regulars
 
Join Date: Aug 2015
Posts: 956
Thanks: 1,338
Thanked 1,320 Times in 730 Posts
novicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to beholdnovicetrader is a splendid one to behold
Default

Originally Posted by Ajax i4u View Post
but what happened in the end (net)

Quote:
I did make a profit on this trade because I let the option expire with some value. But much to my surprise end of the day when I received the contract note, found out that the Security Transaction Tax (STT) in case of exercised options is 0.125% of the entire contract value as opposed to 0.05% of the premium value if I had sold them on the exchange. So even though I did make a gross profit on this trade, to my shock, I ended up with a huge loss of Rs. 18 lakh because I had to pay STT of over Rs. 24 lakh. If I had sold the options before the market closed, the STT I would have had to pay would have been a few thousand rupees, but holding it just for a few minutes extra cost me over Rs. 16 lakh in losses.

__________________
WILD
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
The Following 2 Users Say Thank You to novicetrader For This Useful Post:
  #9 (permalink)  
Old 28-03-2017, 03:59 PM
Ajax i4u's Avatar
Ajax i4u Ajax i4u is offline
indiTraders VIP
 
Join Date: Mar 2009
Posts: 3,730
Thanks: 4,370
Thanked 10,208 Times in 3,106 Posts
Ajax i4u has disabled reputation
Default

Originally Posted by novicetrader View Post

moral .. if you let it expire. play for big premiums

better still, close your trades manually , pay a little brokerage n small STT
and good for accounting als0
__________________
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
The Following User Says Thank You to Ajax i4u For This Useful Post:
  #10 (permalink)  
Old 28-03-2017, 04:42 PM
kkseal kkseal is offline
Hip-py
 
Join Date: Apr 2009
Posts: 4,978
Thanks: 6,571
Thanked 9,571 Times in 4,123 Posts
kkseal has a reputation beyond reputekkseal has a reputation beyond repute
kkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond reputekkseal has a reputation beyond repute
Default

No such problem on selling/writing as STT is levied on the sell leg. So makes no difference if u sqr-off or let it expire.
__________________
'Growth & Value are joined at the hip' - Warren buffet
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!
Reply With Quote
The Following 3 Users Say Thank You to kkseal For This Useful Post:
Reply

indiTraders - Forum for the Active Indian Trader > Markets > Futures & Options


Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are On
Refbacks are On


DPonline

All times are GMT +5.5. The time now is 06:54 PM.


vBulletin Copyright by vBulletin

Content Relevant URLs by vBSEO 3.3.2