Comment on Commonly Used Jargons

Janardhan Reddy commented on 08 Dec 2014, 04:24 PM

Hi Karthik,

In a scenario where I take a short position on a nifty put option at a strike price of 8400, which expires on 24th Dec 2014.

My questions are.
1. What happens on the expiry, if the nifty reaches the strike price? and what happens if it doesn’t reach a strike price?
2. If the nifty goes up and the premium for the 8400 strike price goes down. In this case I strike off my position. Which will be a profitable trade. Is this option available?
3. Assuming I took a short put option on nifty at premium of 50 rs, i took 4 lots (currently nifty lot is 25) which would cost me 5000 rs. If the premium of the above position goes up to 100 and I don’t have money in my trading account. What would be the possible outcomes on this situation.


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