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

Nithin Kamath commented on 10 Sep 2014, 08:55 AM

Nitesh, an option might trade at 0.05 because that is the minimum it can trade at. Many people like to exit options which are worthless, because it will free up margins which they might need to take fresh positions for the next series. But if you don’t have that constraint, you can just leave as it is and it will expire worthless.

If you have bought JP Asso 75 calls, and JP associates stock price at 75 or lesser, your option expires worthless. If JP associates expires anything over 75, the 75 calls now become in the money. So what this means is that if you don’t sell it, it will get exercised automatically. If you have bought this option, this is when the STT shoots up, but if you are someone who has shorted this option you still have nothing to worry.

Hopefully clarifies.

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