Many traders will indulge in Option trading especially on Expiry Day to make some quick buck as sometimes Rs 1 Options can jump to Rs in matter of time.
During my trading Seminargeneral question which most of participants have is. Why do options trade at lesser than theoretical value on the expiry day? Let me explain them with few elaborative examples: Ideally it should be at least 50, so why?
Basics on Options Shorting/Writing « Z-Connect by Zerodha
Exchange applies STT as discussed below. STT on normal option trades done on the exchange is 0. STT on BUY option positions that get exercised is 0. So point to note here is STT is applied on Contract Value in case the Option get exercised.
Options are considered exercised if you hold buy positions in options till the end of expiry till after 3. If you are holding Options which are having value as 0.
The Concept of Short Selling In Nifty - Nifty Trading Strategy
So binomial option tree example consider 2 Example to show how will STT be calculated: Again while buying there is no STT, but since it is exercised on the selling side you would pay an STT of Rs 0. So now Traders will be tax treatment incentive stock options to unravel the mystery why CE and PE are trading less than their theoretical value.
So if a traders exercise the Nifty Call and Put he need to pay an higher STT in tune of odd Rupee per lot which is equivalent of 6 points in Nifty Options.
If you see options which seem to be cheap trading lesser than theoretical valuedo consider the fact that it is so because of higher STT and short selling nifty options not magically correct before the end of the day.
Nifty Options-What happens on Expiration day? | Bramesh Technical Analysis
If I have bought call of ABC company Now on the day of expiry the share price is and the call is trading If I do not sell it, what will happen? Will it get converted automatically to the Next Month contract or I will lose my Money?
And on the day of expiry, nifty ends at But, I dont square off my position wat happens? What is the penalty? When does my blocked margin money get released?
What is my profit? I saw this since two months.
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