Comment on STT Trap - Options Expiry - NSE BSE MCX-SX

Hi Nithin,

If I sell an ITM option contract, the traded value closer to expiry will be less than the intrinsic value due to STT. In such a case, is it mandatory to square off the trade to gain on the STT? Can the option writer gain the value even if he lets the exchange do the settlement? If the exchange does that at theoretical price based on the closing price of the underlying index, the writer would rather gain by squaring off the order himself rather than leaving it to the exchange.

Thanks

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