Comment on Basics on Options Shorting/Writing

Nithin Kamath commented on 21 Mar 2015, 04:40 PM

Ganesh, we have just started the option module on Varsity, check this out:

1. In India all options now are European. Exercising is basically when the buyer of the option exercises his right. Since in India all options are cash settled, exercising would basically mean that you get back the intrinsic value of the option. So if you have Reliance 900 calls and reliance stock closes at 920. If you exercise, you get back Rs 20.

2. yes.

3. In options the profit will be credited only once you close/exit the position.

4. For option buying you don’t get any exposure. For option shorting, you will need 40% or 2.5 times exposure.

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